Preamble

The House met at half-past Two o' clock

PRAYERS

[MR. SPEAKER in the Chair]

PRIVATE BUSINESS

GREATER LONDON COUNCIL (GENERAL POWERS) (No. 2) BILL

Lords amendments agreed to.

ASHRIDGE (BONAR LAW MEMORIAL) TRUST BILL

Considered; to be read the Third time.

Oral Answers to Questions — SOCIAL SERVICES

Support Services (Privatisation)

Mr. Haynes: asked the Secretary of State for Social Services what evidence he has that privatising support services can produce expenditure savings.

Mr. Lofthouse: asked the Secretary of State for Social Services what level of savings he expects to achieve as a result of encouraging the privatisation of support services to hospitals.

The Secretary of State for Social Services (Mr. Norman Fowler): There is the potential for substantial savings in some hospitals. Ministry of Defence experience with service hospitals suggests that for cleaning, savings ranging to 20 per cent. could be made.

Mr. Haynes: Is the Secretary of State aware that I have seen the reports and figures that he boasts about relating to the privatisation of services in the National Health Service? Is he further aware that the figures and reports that he puts forward at the Dispatch Box do not ring true when compared with the real figures? When will the Secretary of State and the Government move away from political dogma, let National Health Service workers get on with the job they were appointed to do, and stop suggesting that pockets in the private sector should be lined?

Mr. Fowler: It is a bit rich to be lectured by the hon. Gentleman on political dogma. I have no idea to which reports the hon. Gentleman is referring. If he is referring to the Ministry of Defence reports to which I referred in my answer, I can tell him that substantial savings have been made by contracting-out. Indeed, savings of up to 60 per cent. were made in one hospital.

Mr. Lofthouse: Will the Secretary of State consider purchasing some of the human kidneys that are being purchased by the private sector from the United States at a cost of £3,000 each—thereby continuing the policy that

the rich shall live and the poor shall die—for those on National Health Service waiting lists who have no chance compared with patients in the private sector?

Mr. Fowler: We shall do everything possible to promote greater co-operation between the private sector and the National Health Service, because the Government wish to reduce NHS waiting lists.

Mr. Beaumont-Dark: Does my right hon. Friend agree that if privatising support services means that more money will be available for patient care, that is a proper use of public money? I thought that the object of the National Health Service was to help those who are sick.

Mr. Fowler: I agree with my hon. Friend. The money that is saved can be used to provide more services for patients. I thought that that was what the welfare state and the National Health Service were all about.

Mr. Ennals: Will the Secretary of State confirm that ever since the National Health Service was established health authorities have been free to contract-out work, but it was found that tenders were inadequate or that the work carried out was unsatisfactory? Does the right hon. Gentleman accept that the only new item that he has introduced is to relieve contractors of paying VAT, at the taxpayers' expense? Will he do the same for the voluntary organisations?

Mr. Fowler: The activities of the voluntary organisations are not my responsibility. The rest of the right hon. Gentleman's question is wrong. Contracted-out expenditure rose from £135 million in 1980–81 to £160 million in 1981–82. Health authorities are showing confidence in contracted-out arrangements.

Mr. Michael Morris: On the question of savings as Tadworth is now to be run by a conglomerate of charities, will they be able to buy in services free of VAT?

Mr. Fowler: The position of charities is a matter for my right hon. and learned Friend the Chancellor of the Exchequer, and my hon. Friend will know his response to that.

Mrs. Dunwoody: Is it not true that the Secretary of State can make his cowboy charters work only by relieving contractors of VAT and ensuring that they have the benefit
of free office space, free telephones, free protective clothing and free laundry services? Has the right hon. Gentleman made any calculations of how much that will cost the health authorities?

Mr. Fowler: The hon. Lady has made an extremely silly point. Her description of the public sector is ludicrous. Our first concern must be the interests of the patients. I would expect the Opposition to support, not attack, this policy if it provides more money for patient care.

Mrs. Dunwoody: Will the right hon. Gentleman undertake not to insist on a regional authority going ahead if the cost of a private sector contract is higher than the cost of having the work done by the NHS?

Mr. Fowler: I gave the hon. Lady that assurance last time. We shall not insist on health authorities taking on contracts that are more expensive just because they are in the private sector. However, the hon. Lady should recognise that the other side of that coin is that if the private sector can do it more cheaply, it should be allowed to do so.

Supplementary Benefit (Life Insurance Policies)

Mr. Marlow: asked the Secretary of State for Social Services if he will increase the level of surrender value of life insurance polices which is disregarded before payment of supplementary benefit.

Mr. Fowler: We have received a number of representations about wholly or partly disregarding the surrender value of life assurance policies for supplementary benefit purposes. We are keeping this aspect of the capital rule in mind.

Mr. Marlow: Is not my right hon. Friend deeply concerned that those who have saved a nest egg find, when they fall on hard times, that it is addled because they have to spend nearly all of it before they can receive any support from the state, while those who have blown the lot on booze, bingo and the Costa Brava are baled out straight away? Will my right hon. Friend speak to the insurance companies, ensure that people are not penalised and can, at least, obtain the fully paid-up value if they are forced to surrender their policies?

Mr. Fowler: Obviously we shall keep that aspect of the capital rule in mind. I have much sympathy with my hon. Friend's first point.

Mr. Joel Barnett: Is the Secretary of State aware that many elderly people have been paying small sums of money for policies that are intended to meet burial costs, because of the inadequacy of the death grant? Will the right hon. Gentleman at least disregard the smaller elements in those surrender policies?

Mr. Fowler: The Government are actively reviewing that matter. I have great sympathy with the right hon. Gentleman's point, but I am not in a position to make any announcements at present.

Mr. Wrigglesworth: Will the right hon. Gentleman look at the case of one of my constituents and consider disregarding a compensation payment that was paid to someone on supplementary benefit after he had suffered a bad accident? Could the compensation for all the damage caused be disregarded for supplementary benefit purposes?

Mr. Fowler: I shall look at that case.

Mr. Cormack: Is it not entirely incompatible with the philosophy that we seek to advance to penalise thrift in this way? Will my right hon. Friend give us an assurance that at least policies of £5,000 or less will be disregarded?

Mr. Fowler: I have much sympathy with my hon. Friend's point. However, I am not in a position to make an announcement now, although I shall consider what he has said.

Mr. Foster: Why cannot the Government at least be generous to some categories of the poor and unemployed by completely disregarding the surrender values of insurance policies? Has not the DHSS estimated that it would cost less than £250,000 to do so?

Mr. Fowler: I note the pressure on this matter by the Opposition. As I have said, I am not in a position to make an announcement, but, if an announcement is made, I imagine that the Opposition will welcome it.

Statutory Sick Pay Scheme

Mr. Henderson: asked the Secretary of State for Social Services what progress is being made towards the introduction of the new statutory sick pay scheme.

The Minister for Social Security (Mr. Hugh Rossi): The statutory sick pay scheme will be introduced on 6 April. In preparation for it, all employers have received copies of an "Employers' Guide" and the further information contained in the national insurance contribution tables which were recently sent out to them. This effort has been supplemented by an advertising campaign and by help provided by officials who have given seminars and general advice.

Mr. Henderson: What reassurances has my hon. Friend given to those small business men who expressed anxieties about the scheme? What savings does he expect from the scheme in terms of the number of staff employed and the costs?

Mr. Rossi: We estimate that the scheme will save about 3,000 civil servants and up to £90 million on the public sector borrowing requirement. We are giving small businesses all the help we can and we have tried to make the paper work as simple as possible for them. We shall remind those who have been in the habit—as many of them have—of paying employees who are sick for a short time their ordinary pay that they will be able to recoup statutory sick pay in future.

Mr. Rooker: Will the Minister confirm that he still has the support of small businesses for the introduction of the scheme, as the Government claimed on Second Reading of the Bill? Has he received any requests from small businesses to exclude them from the operation of the Act?

Mr. Rossi: Many small businesses have given us their support, as have the small business organisations. We have gone a long way towards meeting their requests in matters of detail. Obviously, many small business men have not studied the issue in detail and are worried, as anyone would be, by prospective change. However, their fears are exaggerated. Once they become used to the working of the scheme it will become second nature to them.

District Management Teams

Sir David Price: asked the Secretary of State for Social Services whether he is satisfied with the efficiency of district management teams as the base for the running of the National Health Service; and whether he will make a statement.

The Minister for Health (Mr. Kenneth Clarke): I am sure that the revised arrangements for running the NHS, which form the basis of the 1982 reorganisation, will lead to a better managed service and that teams properly accountable to their authorities under the new structures and arrangements will discharge their functions more efficiently. As my hon. Friend knows, a management inquiry has recently been set up, headed by Mr. Roy Griffiths, to advise us further on the effective management of manpower and related resources in the NHS.

Sir David Price: Is my hon. and learned Friend aware that, in the absence of a clearly designated chief executive in each district, there is often a good deal of doubt about who is in overall day-to-day charge?

Mr. Clarke: The Health Service has had the system known as consensus management for several years. We look to the new chairman and to members of the district and regional health authorities to provide the leadership that the NHS needs. It is to them that the teams of officers should be properly accountable.

Mr. Pavitt: Will the Minister reconsider the appointment of his team to consider efficiency and reorganisation? Does the hon. and learned Gentleman recall that last time this happened and business consultants familiar with business methods were called in the McKinsey committee charged the taxpayer £250,000 to make a complete mess of the NHS? When the hon. and learned Gentleman receives the report of the consultant team, will he please take it with a large pinch of Sainsbury's salt?

Mr. Clarke: The most recent reorganisation of the Health Service has eliminated a tier of management and led to much clearer accountability and improved performance. The inquiry headed by Mr. Griffiths is to advise Ministers on good management practice generally.The more good management practices that are adopted by the Health Service, the better able it will be to devote its resources to the care of patients.

Mr. Crouch: Will my hon. and learned Friend confirm that he still sees a real advantage in decisions being taken at the district level, because it is nearer to the patient?

Mr. Clarke: Exactly. We have also strengthened the position of what is known as unit management below the district level, so that, in an individual hospital, there can be a clear line of accountability to an administrator and a senior nursing officer.

Mr. Cryer: Will the Minister ensure that the district management teams also enforce the 1962 code of practice about the hospitality of drug companies? Is the hon. and learned Gentleman aware that drug companies often provide much lavish hospitality in the form of meals and booze to hospital administrators in their attempt to sell drugs? Does he accept that that contributes to the massive cost of providing drugs and that the drug companies make massive profits from the NHS?

Mr. Clarke: There are strict rules about such things in the Health Service, as there are in the rest of the public
sector, and they should be adhered to. We continue to make them clear whenever we have the opportunity. The pricing system enables us to recoup any expenditure on pricing and advertising above the permitted level, and each year we recoup sums of money for the Health Service.

Sir William Clark: Is my hon. and learned Friend aware that many of us think that consensus management has led to inefficiency and been responsible for much of the overmanning within the NHS? Is it not about time that we got the old-fashioned matron back in charge?

Mr. Clarke: Consensus management has its critics. It is one of the matters upon which Mr. Griffiths and his team will no doubt be advising us.
As to the old-fashioned matron, the new reorganisation has enabled us to re-establish clear accountability for nursing services in units such as large hospitals. The Whitley council has chosen to call the modern successor to the matron a director of nursing services. I hope that such officials will carry out the same services as the

matrons did, but many of them are now male and would rather not be called matrons. I hope, too, that they will carry out their duties with the same efficiency as a matron.

Pharmacists (Emergency Cover)

Mr. Hoyle: asked the Secretary of State for Social Services if he will ensure that additional funds are made available to the pharmaceutical Whitley council so that adequate payments at a figure no less than that paid to other professions in the National Health Service can be paid to pharmacists for providing emergency cover.

The Under-Secretary of State for Health and Social Security (Mr. Geoffrey Finsberg): No, Sir.

Mr. Hoyle: Will the Minister ensure that more funds are available so that proper payment can be made to this deserving group of workers instead of the mere pittance that is on offer at the moment? Does it not show the strength of feeling on this matter that both sides of the Whitley council are asking to see the Secretary of Slate to urge him to do just that?

Mr. Finsberg: A sum of money was made available specifically for this purpose. The sensible thing would have been for the Whitley council to accept this sum in order to build for the future upon the new long-term arrangements that we are ready to discuss.

Unclaimed Benefit

Mrs. Renée Short: asked the Secretary of Slate for Social Services how the levels of unclaimed social security benefits are calculated; and if he will estimate the current total of unclaimed benefit.

The Under-Secretary of State for Health and Social Security (Mr. Tony Newton): The method varies. The FIS calculation is described in "The Take-Up of Family Income Supplement: Note on the Estimate derived from the Family Finances Survey", copies of which are in the Library. I will place in the Library shortly a note describing the calculation for other social security benefits for which there is a significant take-up problem. I cannot add further to the information that I gave to the hon. Lady
last month about amounts of unclaimed benefit
Mrs. Short: I am obliged to the Minister for that reply. In the reply that he gave me on 4 February he said that the amount of unclaimed supplementary benefit, which was known only up to 1979, was £355 million and that there was another £55 million for other unclaimed benefits. Is it not high time that he and the Department explained to those claimants who are clearly living in poverty, because they are not getting what they are entitled to, how and where to claim, and made sure that the money that has been voted by the House is used for that purpose?

Mr. Newton: We are trying in a number of ways to improve the take-up. The hon. Lady will know that we have completed a large television advertising campaign on FIS. As a result of our efforts last year, one-parent benefit take-up has risen substantially. Attendance allowance claims were up by 16 per cent. last year and mobility allowance claims were up by 22 per cent. We are doing well on important matters.

Mr. Rooker: Given that benefit rates have increased by approximately 40 per cent.since 1979 and that there


has been a vast increase in the numbers requiring means-tested supplementary benefit, is it not a reasonable assumption that, in terms of supplementary benefit, there must now be well over £500 million a year—approximately £10 million a week—unclaimed by people who deserve it and which, as my hon. Friend the Member for Wolverhampton, North-East (Mrs. Short) pointed out, the House has deemed they should receive?

Mr. Newton: I should not care to confirm the hon. Gentleman's figure, but it is likely that the figure is higher than the £355 million in 1979.
There is one matter that I did not mention when answering the supplementary question asked by the hon. Member for Wolverhampton, North-East (Mrs. Short). We have just issued guidance to local authorities about a system that we hope will identify virtually all pensioners claiming housing benefit who might also be eligible for supplementary benefit. I hope that that, too, will improve take-up.

Mr. Viggers: If large amounts of benefit are unclaimed—and no doubt they are—is that not a strong argument for simplifying benefits wherever possible?

Mr. Newton: Yes, but a balance must be drawn between simplifying benefits and making them fair to individual claimants. That is a matter with which all Governments have to wrestle.

Chronically Sick and Disabled Persons Act

Mr. Woodall: asked the Secretary of State for Social Services what recent action has been taken to ensure the fuller implementation of section 2 of the Chronically Sick and Disabled Persons Act.

Mr. Ioan Evans: asked the Secretary of State for Social Services what recent steps he has taken to improve the implementation of section 1 of the Chronically Sick and Disabled Persons Act; and if he will make a statement.

Mr. Rossi: Local authorities are aware of their duties under sections 1 and 2 of the Chronically Sick and Disabled Persons Act 1970, and implementation is a matter' for them.

Mr. Woodall: Will the Minister make it clear, as has the Royal Association for Disability and Rehabilitation, that keeping disabled people on waiting lists for a long time is illegal? Will the hon. Gentleman give a categoric assurance about the advice that he is giving to local authorities on this important matter?

Mr. Rossi: Lists are a conglomeration of individual cases. If individual cases are referred to me, they will be investigated.

Mr. Evans: Is the Minister aware that full identification of the disabled is a prerequisite to ensuring that help is given to those who most need it? Will the hon. Gentleman make it clear that section 1 of the Act relates not to sample surveys but to the full and individual identification of the disabled in every locality?

Mr. Rossi: Identification is an important responsibility of local authorities. As far as I am aware, they are doing their best to discharge their duties under the Act.

Mr. Wigley: Will the Minister confirm that it is no excuse for local authorities to plead poverty so as not to undertake their statutory responsibilities under the Act?

Mr. Rossi: Yes, Sir.

Mr. Nicholas Winterton: Is my hon. Friend aware of the exhibition in the Upper Waiting Hall entitled "Communications for the Aged and Disabled"? Will he encourage local authorities to visit the exhibition within the next few days, because it would not only help local authorities to save money but ensure that the aged and infirm were able to lead a more meaningful life?

Mr. Rossi: I am aware of the part played by my hon. Friend in mounting the exhibition, and I recommend all to see it if they can spare the time.

Mr. Ashley: The implementation of the Act will reduce discrimination against disabled people. Has the Minister received a letter from Peter Large, who was chairman of the committee that produced a report advocating legislation against discrimination, in which he accuses the Minister of grossly misleading the House of Commons in a recent debate? If so, what was his response, and will he place a copy of it in the Library?

Mr. Rossi: I have not seen that letter, and I refute the imputation.

Mr. Terry Davis: Will the Minister reconsider the answer that he gave to my hon. Friend the Member for Hemsworth (Mr. Woodall)? Is there not some evidence of a trend among local authorities to institute waiting lists for people who have applied for help under the Act? How many local authorities are now operating waiting lists and
how many people are on them? Will the hon. Gentleman use the default powers if he receives evidence of local
authorities operating waiting lists as a dodge to avoid the responsibility that has been placed upon them by an Act of Parliament?

Mr. Rossi: One specific allegation was referred to me, the matter was looked into, and I understand that the problem has been resolved. I deplore the maintaining of waiting lists for those whose need has been recognised and where the local authority should be discharging its obligation to the community. As I said, under the Act my responsibility is to individual families. That is the legal advice that I have been given.

Voluntary Organisations (Co-operation)

Mr. Freud: asked the Secretary of State for Social Services whether he is satisfied with the co-operation between his Department and voluntary organisations.

Mr. Newton: The Department has close, frequent and cordial contacts with well over 200 voluntary organisations, but if the hon. Member has a particular problem in mind I shall be pleased to consider it.

Mr. Freud: Does the Minister accept that the Government's health priorities mean that the responsibility of caring for severely handicapped and disabled children is being left to voluntary organisations? Will he at least rid these organisations of the burden of paying VAT, as he has rid the health authorities of that burden?

Mr. Newton: I am sure that the hon. Gentleman will understand if I say that I believe the main thrust of his question is directed at someone who will be at this Box a little later. After the announcement by my right hon. Friend the Secretary of State about Tadworth Court hospital yesterday and the help for various important


voluntary organisations that care for many severely handicapped and dying children, the Government can hardly be accused of not offering help to voluntary organisations.

Mr. Carter-Jones: What representation has the Minister made to the Chancellor of the Exchequer about charging VAT to voluntary organisations? Will he publish this information in the Official Report?

Mr. Newton: The hon. Gentleman must think that I am green as well as damp.

Mr. Viggers: Is my hon. Friend aware that Voluntary Service Overseas is worried that returning volunteers—about 600 a year—do not have proper class 1 contributions because adequate arrangements cannot be made for their contributions while they are giving overseas service? Has the Minister given any attention to this point, and can he hold out any hope to the organisation and the volunteers?

Mr. Newton: I am aware of the problem. It is rather complicated, and, if I may, I shall write to my hon. Friend about it.

NHS Budget

Mr. Eastham: asked the Secretary of State for Social Services what has been the average annual increase in the National Health Service budget in real terms since May 1979.

Mr. James Lamond: asked the Secretary of State for Social Services what has been the growth in the hospital and community services budget since May 1979 after taking account of pay and price movements in the Health Service.

Mr. Freeson: asked the Secretary of State for Social Services how much money has had to be spent over the past four years in the National Health Service budget to cope with the increase in demand caused by demographic change.

Mr. Fowler: Growth in services in the National Health Service as a whole between 1978–79 and 1982–83 is expected to be about 6 per cent. in real terms, an average annual increase of 1½ per cent. The hospital and community health services growth figure for the same period is 5½ per cent. in real terms. Demographic changes—notably the increased numbers of old and very old people—will have increased hospital and community health services costs by 3·4 per cent. Separate estimates of the cost of demographic changes to the family practioner services are not made, as expenditure on those services is determined largely by demand and therefore naturally allows for any extra costs arising from changes in the population structure.

Mr. Eastham: Is not the Minister deceiving the House, as the figures clearly do not include inflation and pay rises? Since 1979 no fewer than 640,000 more pensioners have needed these services. There is an ever-increasing number of 75 and 85-year-old pensioners who place a terrific burden on the National Health Service. When will the Minister hand some real money to the National Health Service?

Mr. Fowler: The hon. Gentleman is absolutely and utterly wrong. Of course the figures include pay and

prices. If he wants the economic costs—the costs compared with the RPI—[can tell him that there has been a 16 per cent. expansion of the National Health Service in England over the past four years.

Mr. Lamond: Are not these figures prepared to try to conceal what the country knows, which is that health standards have deteriorated sharply under the Secretary of State's leadership? For example, is it understood that the Secretary of State includes in the figures, as increased investment in the National Health Service, prescription charges, which have increased sevenfold since the Government came to office? Does not this statistical distortion arouse a gasp of envy even from that wizard at distorting statistics—the Secretary of State for Employment?

Mr. Fowler: I am not sure what response the Secretary of State for Employment would make. If the hon. Gentleman wants a further measure of the growth in hospital services over the past four years he has only to look at the number of medical staff. We are now employing 4,000 more doctors and dentists and 45,000 more nurses and midwives. That is this Government's record; a Government committed to the National Health Service.

Mr. Freeson: If one takes account of the enforced expenditure on demographic and other similar changes within the National Health Service and calculates that as a whole, one produces the net result that there has been a decrease in real terms in expansion of the service. Is that not having an effect on areas such as mine—an inner city area whose hospital and community services are under threat? When will the Minister do something about such areas?

Mr. Fowler: The right hon. Gentleman is coming to see us about conditions in his area. However, it is absurd to suggest that the provision of more services for more old people, and making modern treatments more widely available, somehow does not count as growth. Of course it does, and that is what we have been seeking to do with the National Health Service.

Dr. Mawhinney: Does my right hon. Friend accept that the fast growth in the population of new towns causes the population figures that he uses to allocate money to the regions to be, of necessity, out of date? What help can he give the third generation new towns with their health problems, which have been caused by this rapid expansion?

Mr. Fowler: We shall continue to review the system. However, as my hon. Friend is aware, we are trying to continue the Labour Government's policy, which was to reallocate resources to the most under-provided legions.

Mr. Mike Thomas: Does not the Minister's reply prove the old adage that there are
Lies, damned lies and statistics.
Once demographic change, the effects of inflation and medical advances have been taken into account, the Government have cut public spending on the National Health Service. The only way in which they can claim an increase is by taking into account the dramatic increase in charges to patients, who are paying for the increased services instead of it coming from public expenditure?

Mr. Fowler: The hon. Gentleman is, as always, wrong. He got it wrong when he went to the Darlington by-election and attacked us on the same ground, when he said:
Mr. Fowler's claims for Health service spending are only true in the sense that the words he uses are literally correct".

Mr. Mike Thomas: That is right.

Mr. Waller: I congratulate my right hon. Friend on the way in which he has ensured that the Government have maintained finance for the National Health Service. Bearing in mind the high cost of keeping people in hospital, does he agree that the best way forward is to encourage people to live a lifestyle that will give them the best chance of avoiding going into hospital? Will he devote more resources to preventive medicine?

Mr. Fowler: That is plainly important. We have a new chairman and director of the Health Education Council and I look forward to a new effort in this area.

Optical Charges

Mr. Roy Hughes: asked the Secretary of State for Social Services whether he will ensure that optical charges will not rise in real terms in 1983–84.

Mr. Kenneth Clarke: Charges for all family practitioner services, including charges for ophthalmic services, will increase only in line with costs in 1983–84.

Mr. Hughes: Will the Minister bear in mind that the maximum charge is now £15·50 compared with £6·15 when the Government took office, an increase of no less than 152 per cent? Will he also bear in mind that there has been a 39·2 per cent. increase in income from charges above the retail prices index? Are not these increased charges deplorable for such a basic and essential service?

Mr. Clarke: The maximum charge to which the hon. Gentleman refers is increasing by 50p next year, which is 3 per cent., and below the present level of inflation. We believe that it is right that people should make a modest contribution to these services to continue the development of the National Health Service. People on low incomes and those in full-time education aged 19 and below are exempt from all these charges.

Mrs. Knight: Does my hon. and learned Friend recall that successive Health Ministers, including hon. Members who are now in opposition, have repeatedly told opticians that they must meet their salaries and overheads out of the profit from the sale of private frames? If any arrangement is to be made to alter the cost of frames this state of affairs must be borne in mind.

Mr. Clarke: We have recently increased substantially the fees paid to opticians for sight testing and other National Health Service work. I am glad that we have reached agreement with the profession on a proper range of fees for its Health Service work. Charging for private frames is a matter for the optician and the patient. I believe that there is some concern about this. I am glad to say that the cost of private frames appears to be dropping substantially in the present year, probably thanks to the arrangements that we have reached on the forward level of remuneration for National Health Service work.

Mrs. Dunwoody: This third increase will bring the increase since the Government came to office to 152 per cent. Is the Minister really saying that this can be justified in terms of the need for proper optical care?

Mr. Clarke: The hon. Lady knows that her figure is arrived at only by making use of selective years. The previous Government neither abolished the charges nor raised them in their last years in office. We have therefore caught up a little on the gap that opened up in the late 1970s. We have now reached a reasonable level of charges, with exemptions for those who have difficulty paying. The hon. Lady cannot advocate giving up the revenue produced and, at the same time, suggest that she wants to develop and improve the treatment of patients under the National Health Service.

Patients (Statistics)

Mrs. Faith: asked the Secretary of State for Social Services what information he has as to the number of inpatients and outpatients, respectively, treated in National Health Service hospitals in 1982–83; and what was the equivalent figure for 1978–79.

Mr. Geoffrey Finsberg: Hospital activity statistics are collected centrally on a calendar year basis. The 1982 figures are not yet available. In 1981 there were 5·76 million inpatient discharges and deaths, 0·71 million day case attendances, and 35·57 million outpatient attendances in National Health Service hospitals in England. This compares with 5·37 million inpatient discharges and deaths, 0·56 million day case attendances, and 33·95 million outpatient attendances in 1978, representing increases of about 7 per cent., 27 per cent., and 5 per cent. respectively.

Mrs. Faith: Does my hon. Friend agree that those figures are a matter for congratulation and reflect the fact that there are 40,000 more nurses and many more doctors working in the National Health Service, and that the National Health Service has been organised more efficiently since the Government took office?

Mr. Finsberg: I am delighted to confirm that my hon. Friend, unlike most Opposition Members, understands the fact that we are spending more in real terms on the Health Service.

Mr. Campbell-Savours: Do not increased inpatient and outpatient attendances derive in part from the increased incidence of lead poisoning in children? Will the Minister give an assurance that he intends to consult his hon. Friends to ensure the early introduction of legislation to ban the sale of small lead figures and other lead toys to children, who otherwise will be in increased danger?

Mr. Finsberg: I am sure that this is a matter that my hon. Friend the Minister for Consumer Affairs is examining. I shall be delighted to talk to him on this issue.

Inner London (NHS Expenditure)

Mr. Dubs: asked the Secretary of State for Social Services what is the present level of National Health Service spending in inner London compared with the level in 1978–79, expressed at current prices.

Mr. Kenneth Clarke: The revenue expenditure of the five inner London area health authorities in 1978–79 was


£482 million. In 1981–82, the latest year for which figures are available, revenue expenditure was £739 million. Both figures are at 1978–79 cash prices.

Mr. Dubs: Is the Minister aware that those figures will be extremely puzzling to the many people concerned with the Health Service in inner London? Is he aware that every district health authority in the inner London area is now faced with swingeing cuts in expenditure and is unable to cope with the problems of providing a decent service? Will the Minister now give the real answer to the question?

Mr. Clarke: The problem in inner London is that there needs to be a switch away from the provision of acute beds and acute services to further development of the priority services for the elderly, the mentally ill and the mentally handicapped. The process of switching involves some change. Local consultation has to decide where those changes should take place. The figures that I have given are accurate. People should realise that it is the pattern of service that needs to be changed. The overall level of expenditure is quite generous against a background of falling population.

Mr. Eggar: Will my hon. and learned Friend undertake to study carefully the North-East Thames region proposals, which specifically favour inner London at the expense of outer London health authorities?

Mr. Clarke: The problem faced by the region is that population has grown fastest in the suburban areas, where growth in services has been slower, while there has been over-provision of acute beds in inner London. The authority may have eased the flow of resources to follow patients and population to the suburbs. It is, nevertheless, steadily redirecting resources while at the same time trying to develop priority services for the elderly, the mentally ill and the mentally handicapped throughout the region.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Montgomery: asked the Prime Minister if she will list her official engagements for 15 March.

The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today. This evening I hope to have an audience of Her Majesty the Queen.

Mr. Montgomery: Has my right hon. Friend noted the recent demands of the so-called alliance for the complete abolition of the national insurance surcharge? Does she not think that these demands come strangely from the SDP—most of whose members, as Labour Members, voted for the introduction of the 2 per cent. surcharge in 1976—and from the Liberals, who voted for an increase from 2 to 3½ per cent. in 1978?

The Prime Minister: My hon. Friend should not be surprised at the inconsistencies from the party below the Gangway. May I be fair to the Liberal party—[Horn. MEMBERS: "Oh".] I shall be fair to the Liberal party, which voted against the introduction of the national insurance surcharge in 1977, promptly entered into a pact to shore

up the Government who had introduced the surcharge and voted for the increase of that surcharge in 1978. Its spokesman then said:
This is not a tax on employment, … but a tax on spending".—[Official Report, 5 July 1978; Vol. 953, c. 502.]
He lost his seat at the next general election.

Mr. Roy Jenkins: Can the Prime Minister say whether it is now deliberate Government policy to announce the main lines of the Budget in advance to the Sunday newspapers or whether Cabinet secrecy has just become unprecedently lax?

The Prime Minister: Perhaps the right hon. Gentleman has not appreciated that we have, by request, introduced an autumn statement with details of the options. Anyone who studied it clearly and seriously could come up with all sorts of things that may or may riot be true.

Mr. Ancram: Will my right hon. Friend confirm today that she will yet again be demonstrating her interest in, and concern for, Scotland by attending the Conservative party Scottish conference in May, in sharp contrast to the disdainful absence of the Leader of the Opposition from the Labour party Scottish conference this weekend?

The Prime Minister: Yes. I assure my hon. Friend that I shall, of course, be attending the conference at Perth in May. I look forward to it.

Mr. James Hamilton: asked the Prime Minister whether she will list her official engagements for Tuesday 15 March.

The Prime Minister: I refer the hon. Gentleman lo the reply that I gave some moments ago.

Mr. Hamilton: Will the right hon. Lady say once and for all whether it is her intention to make Scotland an industrial wasteland? Is she aware that a further 721 redundancies have been announced at the British Steel works in Lanarkshire? For a change, will she tell Mr. MacGregor to forget about Ravenscraig, which is doing well, and to concentrate investment on putting a Concast plan in the Clydesdale works to ensure that the works will continue to be viable and competitive?

The Prime Minister: I believe that the hon. Gentleman is referring to redundancies announced yesterday, to which
I understand reference was made in the House yesterday. The redundancies announced are a direct result of the end of the boom in the United States oil exploration industry. BSC's decision means that the numbers now will be back to where they were at pre-boom levels just before 1981. [Interruption]These were peak boom levels for the tubes division. The Government have not received any proposals on Ravenscraig from the British Steel Corporation. I understand that a great attempt is being made to secure extra orders for Ravenscraig. That is, of course, what keeps a factory going—not speeches or requests to keep it open.

Mr. Best: Does my right hon. Friend agree that a military solution can never provide a firm and final formula for peace, and that, in the absence of reciprocal measures, one-sided disarmament is just as much a military solution as one-sided aggression?

The Prime Minister: One-sided disarmament is dangerous for the future of democracy, freedom and


justice, which we are determined to protect and defend. I agree with my hon. Friend that we must keep defence forces that are strong enough to deter, if we are to keep the peace.

Mr. James Lamond: asked the Prime Minister if she will list her official engagements for Tuesday 15 March.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Lamond: Did the right hon. Lady hear her economic mentor, Professor Milton Friedman, the other night, when he said that wage increases were not a factor in inflation? If she agrees with that, why will she not stop attacking every reasonable wage claim that is made by workers in this country? Why has she cut the miserably small award made by the wages council to the shopworkers?

The Prime Minister: Because wage increases are a factor in unemployment. The higher the wage increases, the fewer the jobs. We have learnt that lesson time and again.

Mr. Temple-Morris: asked the Prime Minister if she will list her official engagements for Tuesday 15 March.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Temple-Morris: Has my right hon. Friend had time to study the index of industrial production figures out today, which show that manufacturing production is 2·5 per cent. up in January, as against December? Is that not another sign, which should be welcomed by both sides of the House, that the policies of Her Majesty's Government are succeeding?

The Prime Minister: Yes, I saw the figures that came out earlier today. They are indeed welcome figures, although they are for only one month. They tune in with a number of hopeful figures that are coming from the United States, where, like here, there is an increase in manufacturing production, good news in the car industry, good news in the construction industry, good news on inflation, good news on lower interest rates, and good news on retail sales. That is a very good background to the statement that we shall receive later today.

Mr. Foot: Has the right hon. Lady had a chance also to consider the latest crime figures that have been published? Does she see any connection between the record crime figures and the record unemployment figures that have been achieved by her Government?

The Prime Minister: The crime figures are disturbing, and the situation would probably be even more difficult if this Government had not put extra resources into providing extra police and equipment. In answer to what the right hon. Gentleman says about a link with unemployment, I understand that there is research that does not link crime statistics with unemployment. If the right hon. Gentleman studies the increases in figures over the years he will find that the year-on-year increases in statistics of recorded offences went up by about 10 per cent. in 1974, when unemployment was only just over 500,000, about the same amount in 1977, and the same amount this year. That does not seem to show a link wih unemployment.

Mr. Foot: What has become of the promises that the right hon. Lady made about law and order and how she would deal with rising crime? Will she at least give an undertaking, particularly in the light of the statement by Lord Salmon about the infringements of liberty that are involved in the Police and Criminal Evidence Bill, that she will now take urgent steps to withdraw the parts of the Bill that involve those infringements?

The Prime Minister: I have read those comments, but the provisions of the Police and Criminal Evidence Bill are based on the recommendations of the Royal Commission on criminal procedure. The Bill does not give the police carte blanche to search for and seize confidential information from innocent citizens. Indeed, it rules out entry to homes or any premises unless a judge has reason to believe that the evidence needed would otherwise be disposed of. The consent of a judge is required.

Mr. Foot: Does that mean that the right hon. Lady agrees with Lord Salmon's proposition that the proposals in the Bill are monstrous?

The Prime Minister: I can hardly agree with that proposition when the Bill contains proposals that were based on the recommendations of the Royal Commission on criminal procedure.

Mr. Hal Miller: asked the Prime Minister if she will list her official engagements for Tuesday 15 March.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Miller: Does my right hon. Friend accept that there will be a warm welcome for the undertaking given by the Spanish Government in Brussels yesterday to introduce tariff quotas for cars as a recognition of the justice and strength of our case? Does she further accept that there is still a long way to go before parity of tariff treatment is achieved and, in particular, that discrimination still exists on a wide scale against smaller cars, which are those sent to this market and in which we are particularly interested?

The Prime Minister: I agree with my hon. Friend that the arrangements that have been made represent a great improvement on what existed before. Obviously one cannot get everything one wishes, but it is an advance, and I hope that the car industry in this country will take advantage of it. In general, we are nearly in balance in our trade with Spain. The difference this year is slight. We exported £959 million worth of goods to Spain, and we imported £1,002 million worth of goods. So the balance is adverse only to the extent of £43 million. It is good news for the west midlands that we have substantially increased the export of components for motor vehicles to Spain over the past two years. We can do it, and I think that the new agreement is a chance to increase exports.

Mr. Joan Evans: asked the Prime Minister if she will list her official engagements for 15 March.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Evans: Bearing in mind that the Labour Government had to import oil at a cost of £7,000 billion to £8,000 billion each year, and that this Government have had the benefit from North Sea oil of about £40,000 billion, what is the Prime Minister's attitude to the new


OPEC arrangement of confining production and limiting the price? Did she accept the OPEC decision, or does she believe in Milton Friedman's market forces?

The Prime Minister: Of course, OPEC is hardly a market force, as the hon. Gentleman knows. I think we would take the view that is taken by most countries that, in general, the fall in the price of oil that has occurred will benefit the world economy, but that too sharp a fall would be damaging, because of the uncertainty that it would cause. I think that that would be the view taken generally. We are not members of OPEC, and sooner or later we have to follow the market price, as it emerges.

Mr. Wigley: Has the right hon. Lady had time to study the employment policies of Norway, where it was announced on 22 February that because unemployment there had reached the unacceptable level of 4 per cent. it was introducing a crash programme of jobs in local government and doubling apprenticeships? When can we look forward to reaching 4 per cent?

The Prime Minister: The special employment measures here, all told, from September this year—in fact, during this year—will be of the order of £2 billion a year, of which half goes to special training measures. Unemployment in other European countries is similar to

ours, especially taking into account the fact that some of them sent their guest workers home and that a number of them also have permanent conscription.

Mr Chapman: asked the Prime Minister if she will list her official engagements for Tuesday 15 March.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Chapman: On the question of law and order, so properly raised by the Leader of the Opposition, does my right hon. Friend accept that many Londoners are grateful that there are 4,000 more Metropolitan policemen on the beat in parts of the metropolis? Does she further accept that there is increasing concern that so many thousands of hours are wasted by those policemen in having to control political demonstrations? Will she ask her right hon. Friend the Home Secretary to look into that aspect?

The Prime Minister: I am sure that we are all grateful to my right hon. Friend the Home Secretary for increasing the number of policemen in the Metropolitan police force to undertake various forms of policing. There are more policemen on the beat and there is much closer contact with the community. I agree that if the police have to devote their time to too many demonstrations, especially at the weekends, they cannot fight crime in the areas from which they come. That can create difficulties, particularly in some of the London constituencies.

Budget Statement

Mr. David Ennals: On a point of order, Mr. Speaker. I gave you notice this morning that I wished to raise a point of order on the extensive leaks of this afternoon's Budget statement, about which—

Mr. Speaker: Order. Perhaps I may save the right hon. Gentleman's time. No one can tell yet whether there has been a leak—at least, I cannot tell. It is not a matter for me whether, as we shall discover as time advances, there has been a leak.

Mr. Ennals: Further to that point of order, Mr. Speaker. One well-known journalist, on the front page of The Standard today, said:
At Westminster, MPs were speculating whether Sir Geoffrey could have many surprises left with the Treasury already leaking the general shape of the tax package.
I submit—[Interruption.]

Mr. Speaker: Order. The House must be patient for a moment so that we can discover whether there is a point of order on which I can rule.

Mr. Ennals: I submit, Mr. Speaker, that when we have heard the Chancellor of the Exchequer's speech we shall know whether the extensive leaks of the past three days were true. The example that I have in mind is the suggested increase from £25,000 to £35,000 in the amount of mortgage eligible for tax relief.

Mr. Speaker: Order. That is not a point of order with which I can deal.

Mr. Ennals: rose—

Mr. Speaker: Order. The House should now be allowed to continue.

Broadcasting of Parliament (Annual Review)

Dr. Edmund Marshall: I beg to move,
That leave be given to bring in a Bill to provide for the annual review of arrangements for the broadcasting of parliamentary proceedings.
When the present arrangements for sound broadcasting of the House were agreed in 1976 they had my support. While I could see difficulties arising from those arrangements, I believed that such difficulties should be put to the test of experience. If they proved to be real, we could apply our mind to them.
One potential difficulty that gave concern to many hon. Members centred on the question of editorial control of parliamentary broadcasting and whether the tapes of our proceedings would be subject to excessive cutting with extracts interspersed with the chatty comments of the radio reporters. The anxiety was that parliamentary broadcasting would be used by broadcasters for their own ends and that the House would lose control of the way in which its proceedings were being presented at large.
It seems to me that that anxiety has been justified by the changes that were brought about last autumn in the format of "Yesterday in Parliament" on BBC radio each morning. The old format was factual and objective, giving the listener a clear impression of what had happened in
Parliament on the previous day, showing that our prime function is not to entertain but to deliberate on the serious issues in the life of the nation. But the new format of "Yesterday in Parliament" is deliberately angled to be entertaining, with a jazzing-up of the presentation by a lively commentary.
The reason given by the BBC for the change is simply that people switched off when the old style of programme came on. It is wrong that the broadcasting of our proceedings should be determined by the size of the audience. Parliament must not become the pawn of the audience researchers and ratings. Therefore, the House should remind the broadcasters that the ultimate control of the broadcasting of our proceedings is in our hands, not theirs.
To support that basic principle, I quote from page 79 of "Erskine May":
no doubt can exist that if either House desire to withhold their proceedings from the public, it is within the strictest limits of their jurisdiction to do so, and to punish any violation of their orders".
Although I do not wish to withhold our proceedings from the public, broadcasters need to be reminded of the correct position as it is described in "Erskine May".
My Bill provides for the introduction of formal machinery for a definite annual review of parliamentary broadcasting. A report would come to the House each year on whether any changes in the arrangements are desirable. That would help to keep the broadcasters on their toes and reassert the sovereignty of the House in all matters relating to its proceedings.

Question put and agreed to.

Bill ordered to be brought in by Dr. Edmund Marshall, Mr. Jack Dormand, Mr. A. J. Beith, Mr. Stephen Hastings, Mr. James Molyneaux, Mr. Tim Rathbone, Mr. Norman St. John-Stevas and Mr. Phillip Whitehead.

BROADCASTING OF PARLIAMENT (ANNUAL REVIEW)

Dr. Edmund Marshall accordingly presented a Bill to provide for the annual review of arrangements for the broadcasting of parliamentary proceedings: And the same was read the First time; and ordered to be read a Second time upon Friday 15 April and to be printed. [Bill 100.]

WAYS AND MEANS

Budget Statement

Mr. Deputy Speaker (Mr. Bernard Weatherill): Before I call the Chancellor of the Exchequer, it may be for the convenience of hon. Members if I remind them that, at the end of the Chancellor's speech, as in past years, copies of the Budget resolutions will not be handed around in the Chamber but will be available to hon. Members in the Vote Office.

INTRODUCTION

The Chancellor of the Exchequer (Sir Geoffrey Howe): The longest Budget speech that I have been able to trace was given by Mr. Gladstone on 18 April 1953—[Interruption.]

Mr. Deputy Speaker: Order. Perhaps the Chancellor would like to start again.

Sir Geoffrey Howe: I am content, Mr. Deputy Speaker, to recognise that, although Liberals have long lives, they do not live that long. The date to which I refer, of course, was 1853. The speech lasted for about 4¾ hours. The then Leader of the Opposition said of the speech:
…it was so extensive that it is impossible, without consideration, to weigh its disadvantages and advantages".
That could have its merits in certain circumstances. But I can assure the House that I shall not try to rival Mr. Gladstone. Instead, I shall try to follow Disraeli, who delivered a Budget speech in 1867 lasting only 45 minutes. I am afraid that I cannot quite match that; but at least this will be one of the shortest—perhaps the shortest—of my Budget speeches, or at any rate the shortest so far. And that will not be its only attractive feature.
I begin, as last year, by making it clear that I shall today be proposing further significant cuts in the taxes paid both by businesses and by individuals. These proposals will be consistent with our medium-term strategy for effective control of the money supply, for lower public borrowing, and for further progress on inflation.
The requirement we saw, and the country accepted, in 1979, was for resolve, for purpose and for continuity. My proposals in this Budget are rooted in that same resolve, and will maintain that purpose, and that continuity. They are designed to further the living standards and employment opportunities of all our people and to sustain and advance the recovery for which we have laid the foundations.

WORLD ECONOMY

In 1979 it was clear that the long-term decline of Britain's relative position in the world economy called for a fresh start, for a radical new beginning. And it soon became apparent, as the effects of the second oil price shock hit home, that that fresh start would have to be made in an international setting that was increasingly difficult.

Last year world output and trade were lower than generally expected. In the major industrial economies output fell; and more than 30 million of their people were unemployed.

Developing countries have faced similar difficulties. Weak markets for their products, high oil import costs and


high interest rates have led to a sharp rise in their short-term debt. They have had to cut their imports; and that has added to the fall in world trade.

It is worth recalling that in 1979–80 the world price of oil rose by about 2½ times, and that it was this sharp rise, coming in the aftermath of the 1973 surge, that triggered off the deepest economic recession the world has experienced since the war.

Now, however, there are signs that the worst of the problems of the world economy are beginning to abate.

Oil prices have now weakened. For the world as a whole this means lower inflation, and hence an encouragement to increased activity.

More important still, there are clear signs that the world is breaking the inflationary habits of the 1970s. In many countries the rate of increase in prices has fallen more steeply than expected.

At the same time, interest rates have declined substantially almost everywhere, including, of course, here. In the United States, though real interest rates remain high, three-month rates have almost halved from last summer's peaks.

Looking ahead, 1983 should see recovery in the major economies gathering pace as the year goes on. This should be accompanied by a recovery of world trade.

Even so, we cannot expect a year of trouble-free progress. Transition from a period of high inflation is bound to be uncomfortable, internationally as well as nationally. The process of adjustment by major debtor countries has to be encouraged, and world recovery nurtured and sustained.

There is a major task here for the international financial institutions, which deserve—indeed require—our full support. The need is not for blue-prints for new institutions but for increased commitment—political and financial—to the existing ones. That is why, as chairman of the Interim Committee of the International Monetary Fund, I worked this winter for an early increase in the resources available to the fund for lending to countries in difficulty, and why I pressed for a major increase. The decisions reached in the Interim Committee in February require ratification by national Parliaments, including this House. But their effect should be substantially to increase the usable resources at the fund's disposal—and I hope that the House will share my view that this is a wholly welcome development.

The agenda for international discussion remains a full one. Differences in performance by individual industrial countries remain wide and create tensions which are reflected in the foreign exchange markets. The threat of protectionism, which in the, long run benefits nobody, continues to grow. The efforts of the United States Administration to cut back their daunting structural deficit are crucial to the prospects for interest rates and future inflation, and hence recovery prospects, for us all.

It is sometimes suggested that countries which have made most progress against inflation should speed the recovery process by a resort to reflation. But nothing could be more dangerous for recovery.

Lower inflation and lower interest rates are themselves the right foundations for economic recovery, a recovery which can be sustained. The days when Governments by spending more could guarantee to boost activity are far

behind us—as the right hon. Member for Cardiff, South-East (Mr. Callaghan) pointed out almost seven years ago. But lower interest rates, and lower inflation, reduce costs and provide the opportunity for greater real growth of activity.

The prospect now is for just such a recovery. It will be gradual, but it should be steady, provided anti-inflationary gains are not thrown away; and the international consensus is that they must not be thrown away.

This is the heart of the strategy agreed at last year's Versailles summit and recently reaffirmed by the Interim Committee. Carrying it through will need persistence and political will, but it is backed by a broad measure of international commitment, on which we hope to build in the series of international meetings leading up to the Williamsburg summit.

THE DOMESTIC ECONOMY

At home as abroad, the need is for steadiness and resolve.

Government spending is being restrained. The public sector deficit, as a percentage of our domestic product, is now one of the smallest in the industrialised world. Monetary growth is towards the middle of the eight to 12 per cent. target range; and inflation, at 5 per cent., is lower than at any time since 1970.

Last year saw a surplus on our balance of payments current account of some £4 billion. In 1983, too, we now expect a significant surplus. Total official external debt now stands at around $12 billion compared with $22 billion when we took office. This overseas debt burden is now smaller in relation to our trade than at any time since the second world war.

In our own economy domestic demand has been growing—at almost 3 per cent. a year in real terms—since the spring of 1981. This is a stronger growth of demand than in most other industrial countries. Indeed, in the industrial world as a whole demand has tended to fall. With this weakness in overseas demand and a rise in our imports, total output in this country increased last year by only 0·5 per cent. This year we expect domestic demand to grow by over 3 per cent. and output to rise by some 2 per cent. This is likely to be in line with, or a little faster than, the projected growth in world output.

In the last quarter of 1982, output in the construction industry was 6 per cent. higher than a year before. In the three months to January housing starts were more than 13 per cent. up on the previous quarter. And for manufacturing industry too the prospects look better. After a slight fall last year, the current evidence suggests a rise in 1983. Figures published today show a 2½ per cent. rise in manufacturing production in January, which follows a 1 per cent. rise in December. All these are clear indicators of recovery, and should be welcomed in all parts of this House.

UNEMPLOYMENT

Unemployment, however, remains intractably high, even although it has been rising more slowly than in 1980 or 1981. In many countries it has recently been rising faster than here. Over the past year, for example, it went up by 1ֵ6 percentage points in the United States, by 2ֵ3 percentage points in Germany, and by nearly 4 percentage points in the Netherlands, as against only 1ֵ4 percentage points here.

Because unemployment throughout the Western world is likely to remain high for some time, we have established a wide range of programmes, designed to help particularly those without jobs who are bearing the sharpest pains of the long recession. These special employment and training measures will next year bring direct help to almost 750,000 people. We now propose to extend this help in four further ways.

First, some 90,000 men between the ages of 60 and 65 now have to register at an unemployment benefit office if they wish to secure contribution credits to protect their pension rights when they reach 65. From April, they will no longer have to do this. Even if those concerned subsequently take up part-time or low-paid work on earnings which fall below the lower earnings limit for contributions, their pension entitlement will be fully safeguarded.

Second, there are some 42,000 men over 60 who are registered as unemployed and on supplementary benefit but who have to wait a year, or until they reach 65, before they qualify for the higher long-term rate of benefit. From 1 June they will qualify for the higher rate as soon as they come on to supplementary benefit. For this purpose they will in effect be treated as if they had already reached retirement age.

Third, the job release scheme. As the House knows, this scheme allows men over 62 and women over 59 who so choose to retire early, and so to make room for employing someone else who wants a job. I can now announce a new scheme for part-time job release. It will apply to the same categories of older people who are willing to give up at least half their standard working week, so that someone else who is without a job can be taken on for the remaining half. The allowances will be paid at half the full-time rate. The scheme will take effect from 1 October and should provide part-time job opportunities for up to 40,000 more people who are at present unemployed.

Fourth, enterprise allowances. These encourage unemployed people to set up in business by paying £40 a week for their first year to offset their loss of unemployment benefit. Pilot schemes were set up in five local areas in early 1982. The response has been very encouraging and there is already evidence that many of the 2,000 or so new businesses created under the scheme are generating extra jobs. I can now announce that from 1 August to the end of March 1984 enterprise allowances will be available throughout the country, within an overall cash limit of £25 million in 1983–84. Individual allowances will run on for a full year, so that the scheme will cost a further £29 million in the next financial year. The net public expenditure cost is about two thirds of this gross cost. It should help some 25,000 unemployed peole to set up in business. We shall be monitoring the scheme closely, and I hope it will show a continuing benefit to those concerned and to the whole economy.

The gross cost of these four measures is estimated at £55 million in 1983–84 and £55 million in 1984–85. In 1983–84 we shall be spending over £2 billion in all on the full rang of special employment and training measures.

There is one other matter which has, I know, been a cause of concern to hon. Members on both sides of the House. As the House will recall, the November 1980 uprating of unemployment benefit was abated by 5 per cent. We said then that we would review the position once the benefit was brought into tax. That happened in. July last year. As my right hon. Friend the Secretary of State for Social Services said when the House last considered the issue, the Government accepted in principle the case for restoration of the abatement. It is right now to redeem that pledge. In the uprating that takes place in November this year, the abatement of unemployment benefit will be restored in full.

INFLATION

But it is not enough simply to mitigate the effects of the unemployment. It is our purpose as well to secure a sustainable growth in job opportunities. So we must look for a larger share of rising demand to be translated into British output and British jobs.

Progress on inflation is crucial to the prospects of higher output and lower unemployment. High inflation destroys savings, impairs efficiency and undermines stability. So lower inflation is good in itself. But it also underpins a return to lasting growth and to new jobs.

Lower inflation will lead to higher real demand and output, provided we hold to the medium-term financial strategy. Lower inflation helps consumer spending, as savers no longer have to put aside so much simply to maintain the real value of their capital.

Lower inflation encourages higher spending by companies, both on stocks and on investment. For lower inflation contributes to lower interest rates, so improving cash flow; and lower inflation helps keep down other costs. This is one reason why industrial profitability, though still by historic standards very low, has begun to recover. This too should encourage new investment and the creation of new jobs.

Lower inflation and interest rates also ease the burden of mortgage interest, helping house buyers and in turn house building.

With lower inflation the cash programmes of the public sector go further: they buy more goods and services.

Lower inflation will provide the stability and confidence needed for further progress in securing the improvement in Britain's economic performance needed to reverse the long years of relative decline.

Finally, of course, inflation has long been the enemy of good sense in pay bargaining, and so too the enemy of jobs. The understanding that Government will riot finance higher inflation has done much—though still not enought—to bring common sense back into wage bargaining. The way in which excessive pay increases destroy jobs is now much more widely understood.

More moderate pay settlements combined with improved productivity are two of the reasons why last year, in a shrinking world market, British manufacturers succeeded in enlarging their market share. Still lower pay settlements and still higher productivity remain vital to our competitive position. Provided they come through, British


business is now better placed than for many years to make inroads into markets at home and overseas—and provided we go on achieving success against inflation.

Inflation was on a rising trend when we came to office. It peaked at some 22 per cent. in 1980. The reduction since then has been dramatic, with retail price inflation now down to 5 per cent. The benefits of this transformation are felt throughout the country—it results from the firmness and consistency of the policies we have pursued in the pasts four years.

We shall not change course. Downward pressure on inflation will be maintained. With the lower exchange rate some check in our progress now is unavoidable. In the fourth quarter of this year inflation in retail prices may for a time be running at about 6 per cent., a little above what it is now, but still substantially below its level of a year ago. And it seems likely that the rate of increase of the GDP deflator—which is a measure of prices across the whole economy—will continue to fall, from 7 per cent. in 1982–83 to 5½ per cent. next year.

The trend of rising inflation that appeared irresistible has been decisively broken. We are now certain to be the first Government for a quarter of a century to achieve a lower average level of inflation than did their predecessor. In the next Parliament it will be our purpose to do even better.

One weapon we shall certainly continue to use is effective monetary policy. That nonetary policy has a key part to play in the fight against inflation is recognised by the markets and by Governments abroad. However much they nay deny it now, it was, of course, a pillar of the last Government's counter-inflation policy—and rightly so.

In judging manetary conditions we look at the measures of money supply and at other financial indicators such as the exchange rate, real interest rates, and of course at progress in reducing inflation itself. The Red Book includes a full discussion of these matters. Until now, Chancellors have published their thoughts rather like Chairman Mao, in a little Red Book. This year, however, the book is larger and very much easier reading. There are no more pages and much more information at almost the same price. I shall only tru to summarise it at this stage.

Since the last Budget, financial conditions have developed much as I foreshadowed. In the year to February, the growth of all three target aggregates was within the target range of 8 to 12 per cent. Other financial indicators also pointed to moderately restrictive monetary conditions.

But with the satisfactory development of financial conditions and rapid progress in reducing inflation a significant fall in interest rates was possible. By mid-November, short-term rates had fallen to 9 per cent. They subsequently moved up to around 11 per cent., but they are still very substantially below the 16 per cent. of November 1981. The House will have seen that, following the recent easing in market rates, there has this morning been a further cut in bank base rates.

For most of the year the exchange rate was strong. The weakening in November and December seemed mainly to reflect external factors such as concern about oil prices and sharp movements in the world's other major currencies. Opposition statements and election uncertanties, here and abroad, may also have played a part in currency movements.

But this winter's movements in sterling rates were certainly not due to any laxity in the Government's financial policy. On the contrary, our monetary and fiscal objectives were achieved. Provided we continue to meet them—and we are determined to do so—our policies give no reason to expect anything more than a temporary rise in inflation from the fall in the exchange rate that has taken place.

The lower exchange rate gives industry an opportunity to improve its competitiveness, but only if other costs are tightly restrained. I make no apology for repeating that this requires still greater moderation in pay bargaining. Without that there would be only a temporary improvement in our competitive position and no long-term help in providing a sustainable basis for the improvement in output and employment that is now within our grasp.

That is why I cannot emphasise too strongly our view that devaluation brought about by monetary and fiscal laxity would be damaging and that to seek it as a deliberate act of policy would be a grave mistake. It would be a signal to the world of a willingness to accommodate rising inflation—inflation that would undoubtedly be fuelled by demands for higher wages to offset its effects. Confidence would collapse and jobs would be destroyed.

That is not the way we intend to go. That is why, by contrast, last year's medium-term financial strategy again set out a declining path for monetary growth in future years. After growth of 8 per cent. to 12 per cent. in 1982–83, a target of 7 per cent. to 11 per cent. was suggested for 1983–84. I confirm now that the 1983–84 target will indeed be 7 per cent. to 11 per cent. Once again it will apply to both broad and narrow measures of money, though, as I said last year, M1 may for a time grow rather faster than indicated by the range. Given the prospect for inflation, this range gives scope for a healthy rise in output.

The establishment of the medium-term financial strategy has been more than justified by its value as a framework of fiscal and monetary discipline. Another innovation has similarly proved its worth, namely, our decision to diversify our funding policy.

We have made available indexed as well as conventional assets; and we have secured a larger contribution from the personal sector in the form of national savings. I intend to continue this policy.

The Department for National Savings is close to achieving this year's target of £3 billion. For the coming year I am again setting a target of £3 billion. Nearly £2 billion worth of indexed gilts have been issued over the past year and it has been possible to dispense almost completely with long-term fixed interest stocks, which has helped to bring long rates down very nearly as much as short rates.

PUBLIC SECTOR BORROWING

Control of money needs to be supported by firm control of public sector borrowing, otherwise the result is to push up interest rates and create strains that sooner or later prove intolerable. Other countries understand this. All too many have had to learn the hard way.

A substantial reduction in the trend of public sector borrowing over the medium term is a necessary part of the process of reducing inflation. We have made good progress. During the latter half of the 1970s public borrowing represented on average about 6 per cent. of


gross domestic product. In 1975–76 the figure was nearly 10 per cent. By 1981–82 it had fallen to 3½ per cent. of GDP.

For the year now ending I budgeted for a public sector borrowing requirement of £9½ billion. The outturn is likely to be substantially lower, principally because oil revenues during the current year have been very much larger than could have been expected. The latest estimate of the outturn for this year's borrowing requirement is about £7½ billion—or 2¾ per cent. of GDP. However, the year is not yet over and there are large sums on the expenditure side yet to be brought to account and on the revenue side to be collected. So this year's outturn figure is still subject to a considerable margin of error.

For 1983–84 last year's Budget Statement suggested a PSBR of 2¾ per cent. of GDP as consistent with the desired trend to lower borrowing. That is equivalent to about £8 billion at the level of money GDP now forecast. In judging whether that figure is still appropriate I have taken account of developments over the past year and of the main uncertainties which now confront us. On interest rate grounds, there is a clear case for continued fiscal restraint. Interest rates, though lower than they were, are still undesirably high both in nominal and in real terms. The fact that the exchange rate has now moved to a lower level eases the financial pressures on companies, but we need to remember that holding to the medium term financial strategy as inflation falls is the best way of helping the recovery of output.

I have also had to consider the implications of the recent fall in North sea and other oil prices. Of course, lower oil prices reduce the value of our own oil production. But North sea oil accounts for only 5 per cent. of our national income and tax on it for only some 6 per cent. of Government revenues. Moreover, the health of a much larger part of our national economy depends on the state of the world economy. Though sharp swings in the oil price are in no one's interest, moderate reductions mean lower inflation abroad and lower prices here. The fall in the general level of world oil prices is therefore to be welcomed. A more prosperous world will in time mean more output and jobs in Britain.

It follows from this that it would be unnecessary, as well as impractical, to react to every deviation in the oil market by changing the general level of taxes. The forecast published in the Red Book reflects the prices currently offered by BNOC to North sea producers. Clearly there could be a change in oil prices sufficient to affect the balance of revenue and expenditure in the Budget, though not all the effects would be one way. There is no simple arithmetical guide for dealing with this, let alone allowing for it in advance. Much would depend on the extent of the change and the attendant circumstances. If any further reduction in oil prices seemed likely to compromise the success of our economic strategy, I would be ready to take appropriate corrective action; but the lesson for today is that it is prudent to keep planned borrowing down.

Taking these factors into account, I have decided to hold to the previous plan and provide for a PSBR in 1983–84 of 2¾ per cent. of GDP—that is, some £8 billion. Last autumn I announced measures with a revenue cost of some £1 billion in 1983–84. Most of this was directed to reducing the burden on private industry and commerce. It included a cut in the national insurance surcharge.

After allowing for that and for the other changes announced in November, the latest forecasts suggest that

a borrowing requirement of £8 billion in 1983–84 permits further real tax cuts with a net cost to the PSBR of some £1· billion. The full year revenue costs of my proposals will be rather larger than that.

The Red Book gives revenue and expenditure projections for the period up to 1985–86. These allow for a further reduction in public sector borrowing as a percentage of GDP over the medium term. There is of course no certainty about the precise figures, but they show how lower borrowing can be combined with lower taxes within the framework of policies designed to reduce both inflation and interest rates. This was indeed illustrated by my last Budget.

PUBLIC EXPENDITURE

Central to the restraint of borrowing is the restraint of public expenditure, and the key to effective control of public expenditure is that finance must determine expenditure, not expenditure finance.

The House debated last week the public expenditure White Paper which set out our plans for the years to 1985–86. Public expenditure is being held within the levels set in earlier plans. The ratio of public expenditure to GDP, which is the measure of the burden which public expenditure places on the rest of the economy, has been reduced from 44½ per cent. in 1981–82 to a planned 43½per cent. in 1983–84.

In working to get and keep public spending down we have been helped by an important institutional innovation which we have introduced—cash planning. Improved control of expenditure has been an essential factor in making possible the tax reductions I am announcing today.

The additions to certain public spending programmes which I am announcing today will all be met from the contingency reserve and so will not add to the planned total of expenditure.

We have also maintained a strict control over the running costs of Government, in particular manpower. By the end of this month we shall have reduced the numbers of the Civil Service to 651,000—a fall of 80,000 since 1979. The target of 630,000 by April 1984 which we set ourselves on taking office and which some thought unattainable is thus now within reach. Civil Service numbers will by next year be lower than at any time since the war.

SOCIAL SECURITY AND CHARITIES

I now turn to social security. This is much the biggest single element in public expenditure—more than one-quarter of the total.

About half of social security expenditure is on benefits for pensioners. The costs are borne mainly by contributors and we had in November to announce further increases in national insurance contribution payments, which take effect from next month.

The House will remember that, because prices have been falling faster than expected, the provision in last November's uprating for the rise in prices in fact exceeded it by 2ֵ7 per cent.

The forecast method of uprating, which gave rise to this situation, has never worked well, for a forecast made at Budget time of what the rate of inflation will be at the time the uprating takes place in the following November is necessarily uncertain. Increases can therefore be larger or smaller than intended. There have been years when prices


have been under-estimated, as in 1981, when there was a 2 per cent. underprovision, which we made good in the following year, and other years such as 1980 and 1982, when the error has gone the other way. In each case there has necessarily been a year's delay before the error of the previous year could be corrected.

The system of trying to forecast inflation, introduced in 1976, is a fragile basis for calculations of such importance to millions of our fellow citizens. Given the experience of the past seven years, the Government believe that it would now be right to restore the more certain system that prevailed before 1976. This is the system by which benefit upratings are calculated on what has actually happened to prices, rather than on what might happen in future—if the forecast proves right.

From this November, therefore, we shall return to the historic, or actual, method. The necessary legislation will be introduced immediately.

The uprating this November will be based on the rise in prices in the 12 months to May of this year. That figure will be announced by the Department of Employment in the usual way, and will be the basis for the uprating statement as soon as possible after that. We have chosen the May figure because it is the latest month we can use as the basis of the calculation and still make sure that all recipients get their increase in November.

The uprating will be based on whatever the May figure turns out to be. At this stage, of course, it is impossible to say exactly what it will be.

It seems likely, however, to be in the region of 4 per cent. Of course, in November, as I have already told the House, the annual rate of inflation may for a time be running at about 6 per cent., but if we had retained the old system, and taken full account of last year's 2ֵ7 per cent. overpayment, the increase in benefits would have been significantly smaller than is now proposed.

There will be no question of asking pensioners to return any of the pension money they have already received, no question of any so-called clawback. Beneficiaries will retain the full benefit of the extra payment they are now receiving; and part of it is likely to continue into 1984.

Linked public service pensions will be raised in November by the same percentage as benefits. For unemployment benefit, the increase will be in addition to the restoration of the 5 per cent. abatement which I have already mentioned.

On the basis I have described, the position for pensioners over the lifetime of this Government is this. Between the November upratings of 1978 and 1983 prices are likely to have risen by some 70 per cent. and pensions by some 75 per cent. Our pledge to maintain the value of the pension over the lifetime of this Parliament will thus have been more than fulfilled.

There is one other social security benefit to which we attach no less significance. It plays a major part in easing the unemployment trap, and so in our strategy of improving incentives for everyone. It is important for families, and particularly for the low paid. Indeed, it is the benefit which provides the greatest help to many of the poorest families in the country. I refer, of course, to child benefit.

I am glad to be able to tell the House that from November 1983 the rate of child benefit will be increased from £5.85 to £6–50. One-parent benefit will be

correspondingly increased to £4.05. On the basis of our inflation forecast, both benefits will then be worth more than ever before. I know that the House, and the country, will welcome this news very warmly.

The Government also give special priority to help for the sick and disabled, and for widows, and I am proposing further measures to increase that help.

In my first Budget I exempted from tax war widows' pensions and widows' child dependency allowances. In 1980 I introduced a bereavement allowance to benefit widows in the tax year of their husband's death. However, because their income in that year is already covered by other allowances, many newly widowed women receive no financial benefit from that allowance. Accordingly, it will now be extended to cover the year after the husband's death as well, at a cost of some £30 million in a full year. This means that more than twice as many widows will benefit.

We also intend to provide significant new help for about 55,000 invalidity pensioners. Until now the so-called invalidity trap prevented them from receiving the longterm rate of supplementary benefit. I announced earlier that the unemployed over 60 will now be entitled to the long-term rate. We shall extend this concession to those over 60 who are sick and disabled, so that they, too, will qualify straight away for the long-term rate. In addition, I am glad to be able to tell the House that people under 60 who have been on incapacity benefits for a year will also qualify for the long-term rate. This will get rid of the invalidity trap—and quite right, too. There will also be an increase from £20 to £22ֵ50 in the amount which disabled and chronically sick people can earn before their benefit is reduced.

While we need to ensure that social security benefits go to those most in need, I am concerned that we should not discourage people from saving. We shall therefore increase from £2,500 to £3,000 the limit above which savings disqualify people for supplementary benefit. There will be an additional disregard of £1,500 for the surrender value of life assurance policies. We shall also increase to £500 the corresponding limit for single payments of supplementary benefits to help with exceptional expenditure.

We will also help over 11,000 war pensioners by replacing the existing vehicle scheme by a more flexible and equitable cash allowance, set at a rate which will preserve the war pensioners' traditional preference over civilian benefits.

These measures, taken together with the increase in child benefit and one-parent benefit and the ending of the abatement of unemployment benefit, will cost over £140 million in 1983–84 and around £400 million in 1984–85. The increases over the existing provision in the social security programme will be charged to the contingency reserve. This is in addition to the cost of the extension of the long-term rate of supplementary benefit to the over-60s, to which I referred earlier.

But caring means more than cash. Many of the key needs, for example, of the elderly, are met by voluntary groups and charities. If they are to do all they can, we must help the helpers.

Once again we have been pressed to reimburse charities for VAT on their taxable purchases. But, however exhaustively and sympathetically we examine this proposal, the difficulties remain and cannot be swept aside. I have been able in previous years to extend VAT


reliefs for the disabled and charities serving them. But a VAT refund scheme would be expensive to operate and indiscriminate in its effects, benefiting not only those charities which do valuable work in the community but also—and sometimes disproportionately so—many other bodies with very limited or controversial aims which do not command public support. So, as before, I have been forced to conclude that we are right to channel our help in other ways.

But I intend to give some extra help. In 1980 I introduced substantial new tax reliefs for convenanted donations to charities, by allowing relief against higher rates of income tax up to a ceiling of £3,000 a year; and last year I increased the limit on exemption from capital transfer tax for gifts made within a year of death from £200,000 to £250,000. I propose now to carry these two measures further by raising to £5,000 the ceiling on higher rate relief for gifts made by deed of covenant and by abolishing the ceiling on exemption from capital transfer tax for charitable bequests. All outright gifts and bequests to charities will now be entirely free from CTT.

I have had representations about the position of companies which would like to second their staff, with pay, to charities. At present the employee's salary is not allowable for tax because it is not an expense incurred by the company wholly and exclusively for the purpose of its business. For normal business expenses we must continue to stick to that general principle. But I am satisfied that it is right to make an exception in this limited case. Companies which lend staff to work for charities and continue to pay their salaries will now be able to treat the cost as an allowable expense for tax purposes.

HOME OWNERSHIP, HOUSING AND CONSTRUCTION

I come now to housing and the construction industry. The whole House is anxious to see more activity in this sector. Within the public expenditure plans there is provision for capital expenditure on construction in 1983–84 of over £10 billion, a 10 per cent. increase on this year's expected outturn. We want this money used effectively for the purpose for which it is intended.

One of our highest priorities has always been the extension of home ownership. This Government have done more than any other to encourage this. Since we came to office almost half a million public sector tenants have bought their homes; and the fall in mortgage rates over the past year has made it easier for first-time buyers to meet the costs of a mortgage.

But it is now clear that the £25,000 limit on mortgage interest tax relief is beginning to hinder a growing number of families who want to buy their first home, or to move. I have therefore decided to increase the limit—this figure may reassure the right hon. Member for Norwich, North (Mr. Ennals)—to £30,000. This will cost some £50 million in 1983–84. It will help potential home owners and the construction industry alike. At the same time, I intend to remove an anomaly whereby a borrower may get tax relief in excess of the ceiling for both an ordinary mortgage and an interest-free loan from his employer.

I also propose to extend mortgage interest relief of the kind already enjoyed by many employees, whose duties prevent them from living in their own homes, to self-employed people, like tenant farmers and tenant licensees, who have a contractual requirement to live in

accommodation provided for them but who are also buying their own homes. This will be accompanied by a similar extension of the capital gains tax relief applying to a private residence.

We want to help people not only to own their own homes but also to keep them in good repair. Last year I announced a major attack on disrepair by increasing the rates of repairs grants. This has proved very successful. Expenditure in 1982–83 will be twice that in 1981–82 and a further increase is expected next year.

We have already announced that the higher rates are to continue until the end of 1983–84; and local authorities have been told they may spend without limit on all improvement grants next year. To ensure that we get the greatest impact from this initiative, the limits on expenditure eligible for grant will be increased by 20 per cent.

Our main aim, of course, is to help people to help themselves. But there are some areas, particularly in the inner cities, where decay in the private housing stock is so bad that concerted action is needed. We are encouraging local authorities to tackle such areas by the process known as enveloping—where the authority repairs the external fabric of whole terraces or streets of houses on behalf of the owners. This has proved a cost-effective way of improving an area, and we will be allowing local authorities to undertake additional expenditure in 1933–84 on any approved enveloping scheme.

These two measures are likely to lead to additional expenditure of some £60 million in 1983–84. In addition, my right hon. Friend the Secretary of State for the Environment is today announcing further measures to encourage local authorities to make full use of the resources available to them for capital investment.

Today I can announce three further steps to help the construction industry.

First, in 1981 I introduced a scheme to defer development land tax on developments for the owners' own use. The scheme, which is due to end in April 1984, has proved valuable, and I propose to extend it to April 1986, at a cost of £4 million in a full year.

Secondly, stock relief will from today be available for houses accepted by builders in part exchange on the sale of a new house for the personal use of an individual or his family. This will cost £5 million in a full year.

Thirdly, I propose to increase from 10 per cent. to 25 per cent. the proportion of office space in buildings qualifying for the industrial buildings allowance—an allowance which I increased in 1981. The cost will be about £25 million in a full year.

INDIRECT TAXES

I come now to the indirect taxes.

I propose no change in the present rate of value added tax.

In successive Budgets I have sought to establish the sensible presumption that the excise duties should be adjusted broadly in line with the movement of prices from one year to the next. This is essential if we are to maintain the right balance between direct and indirect taxes.

This year, too, I intend to follow the same approach. But our success in reducing inflation means that the increases I shall be announcing will be much smaller than in recent years. The additional revenue I shall be seeking


from duty changes this year is about half of the comparable figure in 1980 and 1982 and about a quarter of that in 1981.

I start with the duties on alcoholic drinks. I propose to increase the duties from midnight tonight by amounts which represent, including VAT, about 25p on a bottle of spirits, 5p on a bottle of table wine, 7p on a bottle of sherry and 1p on the price of a typical pint of beer. On cider, which is increasingly competing with beer, I propose a similar increase of 1p a pint.

As for tobacco, I propose to increase the duty by the equivalent, including VAT, of 3p on the price of a packet of 20 cigarettes. There will be consequential increases for cigars and hand-rolling tobacco, but no increase for pipe tobacco. That is not just in deference either to my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) or to the right hon. Member for Huyton (Sir H. Wilson), but it gives me the opportunity to reassure the right hon. Member for Huyton that the pipe in his pocket has not been devalued. These changes will take effect from midnight on Thursday.

Next,the oil duties. I am conscious of the concern felt by a number of my hon. Friends about the effects of increases in duties on petrol and derv. But at a time when world oil prices are falling it would not be right to allow the real value of the duties to be eroded significantly. I propose therefore to increase the duty on petrol by about 4p a gallon, including VAT. In the case of dery I propose an increase, including VAT, of about 3p a gallon. These changes will take effect for oil delivered from refineries and warehouses from 6 pm tonight.

As in the last two years, I propose no change in the rate of duty on heavy fuel oil. The real burden of this duty will thus have been reduced since 1980 by some 20 per cent. This will be of considerable continuing assistance to industry, since it will help to hold down its energy costs.

I also propose a number of changes in the rates of vehicle excise duty. For cars and light vans the duty will be increased by £5, from £80 to £85. On goods vehicles, the new duty structure introduced last year allows me to spread the burden more fairly. In order to bring the rates of duty more nearly into line with the costs the various categories of lorry impose on the road system, I propose to increase the duty on some 190,000 heavy vehicles. This means that I shall, on the same lines, be able to reduce by approximately 10 per cent. the rates of duty on some 315,000 lighter commercial vehicles. These changes will take effect from tomorrow.

The total effect of all the changes in excise duties will be to raise additional revenue of some £600 million a year. But let me emphasise again that this implies virtually no change in the real burden of indirect taxes in 1983–84. The immediate effect will be to add about 0ֵ4 per cent. to the overall level of prices. This has been taken fully into account in the price forecasts which I have given to the House.

OIL TAXATION

I come now to North sea tax. The development of the North sea is a notable achievement of private enterprise and the result of a huge co-operative effort involving hundreds of companies and thousands of people. We want this to continue into the future, despite changes in oilfield economics. Tax is not the only factor in sustaining North sea potential. Steps taken by the industry to cut costs and the future level of oil prices will be at least as important. But the tax structure must adapt as well.

I am therefore proposing a substantially more favourable regime to assist the companies as they move on to develop new fields, and, in order to help finance new activity, a package of relief on current fields. The industry will benefit from these changes by more than £800 million over the next four years, starting with £115 million in 1983–84.

To encourage further exploration and appraisal, I propose immediate relief against petroleum revenue tax for expenditure incurred after today in searching for oil and appraising discovered reserves.

For future fields I propose two important new incentives. First, the oil allowance, which is the quantity of oil production exempted from PRT, will be doubled for such fields. Secondly, my right hon. Friend the Secretary of State for Energy will be taking steps to abolish royalties for these fields. The changes will apply to future fields where development consent has been given on or after 1 April 1982, with the exception of the relatively more profitable southern basin and onshore fields. I am ready to discuss with the industry whether there is a need to extend these incentives to the southern basin fields. If I were to be persuaded of the need, any extension would be backdated to development consents issued after today.

Most existing fields make good profits, but to improve current cash flow I have decided progressively to phase out advance petroleum revenue tax. As a start, the 20 per cent. rate will be reduced to 15 per cent. from 1 July, and APRT will disappear completely by the end of 1986.

An Inland Revenue press release will give further details, and also describe other proposed changes in oil taxation. They include, following the consultative document published last May, proposals on PRT reliefs for expenditure on shared assets such as pipelines, and for charging related receipts. The proposals will give significant additional relief on expenditure and will exempt tariffs on 500,000 tonnes of oil a year from each field using a pipeline. This will encourage the shared use of these assets.

I believe that my proposals will provide the industry with the right fiscal incentives for the further successful development of the country's North sea resources.

NATIONAL INSURANCE SURCHARGE AND COMPANY TAXATION

From one key industry I turn now to business and industry as a whole. Our living standards and jobs depend on our ability to sell and compete, producing the right goods and services at the right time and the right price. The main responsibility for achieving this lies with industry and commerce. But the Government can help by reducing the burdens they place on business. These can be twofold. High inflation and excessive public borrowing have in the past kept interest rates and business costs higher than they need have been. We have made progress in putting that right. But Government also impose direct burdens on business, and here too we have acted to help cut costs. I have given high priority to reducing the national insurance surcharge, the tax on jobs first introduced and then increased by our Labour predecessors.

In last year's Budget, I cut MS from 3ֵ5 per cent. to 2ֵ5 per cent. In November I announced that, for 1983–84, the rate would be further cut to 1ֵ5 per cent. On top of this I made special arrangements to enable half of that further cut of 1 per cent. to be brought forward into 1982–83.

I now propose that the rate be reduced from 1ֵ5 per cent. to 1 per cent. from August 1983. As before, the benefits will be confined to the private sector. This cut is worth another £215 million in 1983–84 and nearly £400 million in a full year.

The surcharge was 3ֵ5 per cent. when this Government took office. We are now well on the way to abolishing it. the reduction from 3ֵ5 per cent. to 1 per cent. will be worth nearly £2 billion to private business in a full year.

On corporation tax, we issued a Green Paper over a year ago. I am grateful for the many thoughtful responses, which we have examined carefully. There is one impression that stands out, and that is the overwhelming desire on the part of industry for stability in the corporation tax regime. I recognise the force in this. Change is not costless. I have therefore concluded that there should be no change in the broad structure of the present arrangements. As regards the taxation of inflationary profits, I await the outcome of the accountancy profession's further considerations.

There are, however, some useful changes on which I can make a start today.

At present, advance corporation tax can be carried back two years to be set against corporation tax. I propose to extend this over a period to six years. I also propose that the incidental business costs of issuing acceptance credits and of issuing certain convertible loan stocks should be allowable expenses for corporation tax purposes. There are other areas where we need to make progress, including the tax treatment of groups and capital allowances for the mineral extraction industries. I am authorising the Inland Revenue to look further at these issues, and to consult on them where necessary.

On the taxation of international business, I have considered carefully the responses to the latest round of consultation. I have decided not to proceed this year with measures concerning company residence and upstream loans. Both need further consideration.

On tax havens, however, I propose to move clauses which take account of the recent consultations. These will not come into effect until April 1984.

This change should be considered alongside one other proposal that flows from the corporation tax Green Paper.

At present, credit for foreign tax on overseas income is only allowed against such part of a company's corporation tax liability as remains after deduction of ACT. As a result of representations received in response to the Green Paper, I propose that from April 1984 this double tax relief should be allowed against the full corporation tax liability before ACT is deducted.

As I have said, my proposals on tax havens and on ACT and double tax relief have to be seen together Between them they will not involve any increase in the total burden of tax on international business, but they do mean a switch in the tax burden away from those who remit profits home and on to those who accumulate surplus cash balances in tax havens overseas. I am sure that the House will agree that this is right.

To turn to a different area, I announce each year the future scale rates for measuring the benefits from company cars. Recent increases have been at a rate of 20 per cent., but the levels still fall short of any objective measure of the true benefit. This year I am proposing further increases with effect from April 1984; but they will be held to about 15 per cent. These increases will also apply from the same date to the new car fuel scales which come into operation next month.

I have also decided to legislate to bring back into tax the benefit from scholarships provided by employers for the children of their higher paid employees. There will be a transitional exemption for awards made before today so that scholarship income in respect of an existing award will continue to be exempt until the child leaves his present school or college.

I propose, too, to remove an anomaly by which some people have their tax bills artificially reduced because their employers do not account for PAYE at the right time and then pay over too little. I also propose with effect from April 1984 to increase substantially the tax measure of the benefit gained by an employee who occupies rent free, or at a very low rent, expensive accommodation owned by his employer.

The House will be aware of instances of tax avoidance through the exploitation of group relief, and through the exploitation of so-called second hand bonds. I propose legislation to deal with these abuses and also to improve the arrangements for collecting DLT on disposals by nonresidents.

Now I wish to say a word about banks. I said last year that we would be giving further thought to the problem of how best to ensure a sufficient contribution to tax revenues by the banking sector. I have examined the position with great care in the light of current circumstances, and have concluded that it would not this year be sensible to tighten the tax regime for banks.

Finally, for the company sector, I propose some changes that are designed specifically to help small and medium-sized companies. At present the so-called small companies rate of corporation tax is 40 per cent. and applies to taxable profits up to £90,000. The 52 per cent. rate is payable at £225,000. I propose to reduce the 40 per cent. rate to 38 per cent., to raise the lower limit of £90,000 to £100,000, and to raise the upper limit from £225,000 to £500,000.

Between these two limits profits are subject to a marginal rate which stood at just over 66 per cent. when this Government came into office. I have already reduced


it to 60 per cent. The changes that I am proposing today will bring it down to 55ֵ5 per cent.—only a little above the main 52 per cent. rate.

These changes will concentrate the help that I can give on the many small and medium-sized companies with taxable profits of up to £500,000. The cost will be £40 million in 1983–84 and £70 million in a full year.

ENTERPRISE

Small and medium-sized enterprises are a major source of new wealth for the nation and, above all, of new jobs. I shall, therefore, propose today a further series of measures which will foster their growth, greatly extending those which I have already introduced, and whose results are already evident. I am told that Britain now offers a more attractive tax environment than Germany for venture capital and for the microelectronics revolution. That was not so five years ago.

I now propose further action in a number of areas.

I want more people to share in the ownership of the companies for which they work. It is both a good incentive and a good way for people to build up a capital stake. The measures so far introduced have already brought us to the position where about 250,000 employees receive shares each year.

But I want to make these employee profit-sharing schemes more attractive and more flexible, while still open to all employees. Already companies can give tax-free shares to employees each year up to the value of £1,250. I propose to add an alternative limit of 10 per cent. of the employee's earnings, up to a maximum of £5,000. This new freedom will provide still further encouragement to management, upon whom so much depends.

Share options for senior managers also provide an important incentive. Last year I introduced arrangements to spread the income tax burden that can arise when an option is exercised. I propose this year to increase the instalment period from three years to five years.

Save-as-you-earn linked share option schemes already cover over 100,000 employees. The monthly limit on contributions with tax relief now stands at £50. In order to encourage further growth I propose increasing it to £75. The total cost of all these share incentive measures will be £20 million in 1983–84 and some £35 million in a full year.

I also want to ease the path for employees of a company who seek to buy the business for which they work. The transformation that followed the employee buy-out of the National Freight Company shows how valuable this can be. In order to help those who borrowed to take part in this buy-out, and to encourage similar success, I propose that where an employee-controlled company is being set up the employees should benefit from interest relief on loans they take out to buy shares in it.

Capital taxes can suffocate enterprise. Last year we took the major step of indexing capital gains. It is clearly appropriate to provide a period of stability to let the new structure settle in. We have already announced that administrative measures will be introduced to help large institutional investors. I now propose that, as the legislation provides, the annual exempt amounts for individuals and for trustees should be increased in line with inflation; and I propose to increase to £20,000 the limits on the relief for small part disposals of land and for residential letting.

I propose to double the present retirement relief, raising it to £100,000. This will further encourage entrepreneurs to keep money in their business where it can work to best effect. I have received a number of representations that other features of the present relief cause difficulty, and we shall therefore be conducting further consultations later this year.

The cost of the CGT measures I have announced will be £15 million in a full year. There will be no cost in 1983–84.

On capital transfer tax, I propose to increase the threshold and rate bands broadly in line with indexation. As a result the threshold will rise from £55,000 to £60,000.

I am concerned that the prospect of capital transfer tax may still discourage those who are contemplating investing capital in small businesses. It may also be one of the factors reducing the number of farms available for letting. I therefore propose to increase relief for minority shareholders in unquoted companies and for let agricultural land from 20 per cent. to 30 per cent.

The cost of these changes in capital transfer tax will be £20 million in 1983–84 and £55 million in a full year. Other minor changes to CTT and CGT are set out in Inland Revenue press notices.

I propose two other measures to help small firms. The VAT registration threshold will be increased with effect from midnight tonight from £17,000 to £18,000, at a cost of £5 million in a full year.

I propose to increase from £200 to £1,000 the de minimis limit for assessment of investment income apportioned to the members of a close company.

I come to the question of innovation and technology. I have already announced an increase in the proportion of office space in buildings qualifying for the industrial buildings allowance. This additional flexibility will be of particular value in the high technology industries, which often need relatively large amounts of space for design and computer-based activities. It will cost about £25 million in a full year. On the tax side I also propose to extend the 100 per cent. first year allowance for rented teletext receivers until May 1984, and for British films until March 1987. The full year cost of these two measures will be £10 million and £30 million respectively.

On the public expenditure side, I propose a range of measures for the encouragement of industry and enterprise worth £185 million over the next three years.

The west midlands has been particularly hard hit by the current recession. Small engineering firms are even more important in that region than in other parts of the economy. They need help to modernise and rebuild their strength. I propose, therefore, to make available an extra £100 million over the next three years to enable my right hon. Friend the Secretary of State for Industry to reopen the small engineering firms investment scheme.

The scheme is already a proven success: 1,750 applications were received last year and more than 1,400 offers of assistance have been made. It is open to qualifying firms in any area, but, as one would expect, a high proportion of the first allocation went to firms in the west midlands. This new, and much larger, allocation should bring substantial further help to the region, as well as to small engineering firms generally.

In information technology, further assistance will be available to enable firms to evaluate the benefits of computer aids for production management, and for the development of innovative software products.

At the moment grants are available for research and development, but there is no special facility for encouraging the marketing and investment stages of the innovation process. To fill this gap a new scheme will be introduced, which will be of special value to small and medium-sized companies.

There will also be an increase in expenditure on the Department of Industry's manufacturing and design advisory services. These provide small firms with a free introduction to private sector consultancy services, and have proved highly successful.

My right hon. Friend the Secretary of State for Industry may have an opportunity, later in this debate, to describe these measures in more detail. Taken together with measures previously announced, they will mean that Government assistance on new technology and innovation will have doubled since this Government took office.

Last year I extended the small workshop scheme by two years for very small industrial units. The scheme is proving very effective in promoting the provision of premises for new businesses. This year I want to encourage the conversion of more old buildings into productive workshops. I propose to allow all such units in a single converted building to qualify for 100 per cent. first year allowances if on average they meet the size requirements.

Now I come to the important matter of finance for business, on which I have major improvements to propose.

Companies and monetary policy alike would both benefit from a revival of the corporate bond market. Lower long-term interest rates are the key to this. But there are also a number of ways of giving companies greater flexibility in the nature and timing of the bonds they issue.

A consultative document on deep discount stock was issued on 12 January. It set out a range of options, and I am grateful to those who responded.

I now propose to introduce attractive tax arrangements for this stock. The borrower will get relief on an appropriate accruals basis, but the investor will pay tax only at redemption or on sale. There was considerable support for such tax treatment.

Companies will still be able to issue conventional or indexed bonds. My proposal extends their range of options.

I also propose certain reliefs to enable companies to issue Eurobonds in this country and to ensure that full tax relief is available for discounts paid on acceptance credits.

We shall be issuing on 21 March a consultative document on the possibilities for the simplification of stamp duty.

The loan guarantee scheme is another important innovation that we have introduced. My hon. Friend the Under-Secretary of State for Industry has conducted a thorough review of the scheme with the help of outside consultants. He will be making a full statement tomorrow. It is clear that the scheme has usefully encouraged lending to the small firms sector. Nearly £300 million has been lent to some 9,000 companies, about half of them new businesses. As a result, the scheme is now close to its present ceiling of £300 million. This ceiling will therefore be raised to £600 million to enable the scheme to run its full three-year course to May 1984, and we may need to seek the House's approval for an increase in the statutory limit for this purpose.

On 3 March I informed the House about the publication of the report of the working party on free ports, under the

chairmanship of my hon. Friend the Economic Secretary to the Treasury. I can now tell the House that the Government accepts the report and will implement its recommendations. Legislation will therefore be introduced in the Finance Bill to enable selected free port sites to be designated.

Free ports are a new trading concept for the United Kingdom and I regard it as essential to make a careful test of the facilities they offer. As the report recommended, the first step is to establish free ports on an experimental basis in a limited number of locations. Widespread consultation will be needed before the sites are chosen.

Last, but far from least, the business start-up scheme. This scheme, announced in my 1981 Budget statement, offers uniquely generous tax incentives to outside investors in small companies. It is not bettered anywhere in the world. But I now intend to better it.

When I introduced the scheme I thought it right to give priority to investment in business start-ups, where there is often the greatest difficulty in raising outside equity finance.

I now propose a major extension of the scheme. It was due to end in April 1984. The life of the new, extended scheme will run to April 1987. From 6 April the coverage will be greatly widened to include not only new companies but qualifying established unquoted trading companies as well. I propose also to double the allowable maximum investment in any year from £20,000 to £40,000. A number of other changes will be made to improve the scheme. In particular, the 50 per cent. limit on qualifying shares will be dropped. The cost of these changes is difficult to estimate, but could be £75 million in a full year.

Those proposals will transform the position of unquoted trading companies seeking outside equity. It is a further move towards removing the bias in the tax system against the personal shareholder, and a further measure to encourage wider share ownership. By concentrating help on those companies which do not have ready access to outside capital the scheme will assist many more small and medium companies to realise their undoubted potential for growth. The new, extended scheme will be known as the business expansion scheme.

Our constant concern as a Government has been to improve the competitive environment for businesses and people who work in them. These proposals mark a further major step in that direction.

FISCAL BALANCE

In judging the right balance to strike in this Budget I have taken into account the measures I announced in the autumn which will directly reduce business costs. I have also taken account of the lower level of the exchange rate. As I said in my Budget speech two years ago, exchange rate changes alter the distribution of incomes between companies and persons. A higher exchange rate boosts personal spending power, but it squeezes the profits of companies exposed to international competition. Consequently, in my 1981 Budget, personal income tax thresholds remained unchanged in order in part to be able to offer some help to companies.

The same considerations led me to direct over two thirds of the real tax reductions in my 1982 Budget towards business and industry in order to help cash flow and rebuild profits. In this Budget, too, the measures I have announced so far go largely in the same direction. Taken


together with the net effect of the changes that I announced last autumn, they will provide help for business and industry that is worth around £1¼ billion in a full year.

And that is less than half the story. For, if revenues from taxes paid by business—apart from the North sea industries—were the same share of total taxes in 1983–84 as they were in 1978–79, then these businesses would have to pay some £3 billion more than is forecast for the coming year. But profits have fallen, and over the years I have acted deliberately to lighten that load in recognition of the case for helping business which has been strongly, and rightly, argued in debate after debate, and from all quarters of this House. I do not believe any hon. Member would suggest that business and industry should pay more tax.

But I have had to recoup the £3 billion, alongside the need both to hold down borrowing—not least to secure lower interest rates, and hence reduce business costs—and to finance public expenditure. Although spending is now being restrained, it is worth noting again that there are few hon. Members who have not called for increases rather than cuts.

It is considerations of this kind which have led to the burden of tax on people, under successive Governments, becoming so unacceptably high. The House and the country must face this reality: spending at current levels, which some still regard as too low, together with current levels of tax on business, which many regard as too high, have brought successive Governments to a position where there has been no alternative to high levels of tax on people.

But the fact is that reductions in personal taxation themselves help business and employment. Indeed, it is the individuals who work in business who largely determine business success. Yet for years in Britain the tax system and the tax burden have discouraged individual effort, commitment and enterprise. By strengthening incentives through lower personal taxes, Government can help increase the commitment to business success at every level. And when the state takes less of what people earn there is less justification for excessive pay demands and settlements. Cuts in personal tax provide a vital stimulus for lasting growth and jobs.

Happily, because we are reining back public spending—though not yet far enough—the choice is less stark now than in the past. I am able to combine the significant measure of direct tax relief to industry and enterprise which I have just announced with a substantial measure of direct tax relief to people.

Acknowledged unfairnesses and anomalies produced by the overlap between the tax and social security systems give further compelling reasons for moving in that direction. It makes no sense that people on low incomes should be paying tax at all. And low tax thresholds are of course an important part of the poverty and unemployment traps. These traps mean that some of those out of work who could find a job, and some of those in work who could find a better one, do not do so because they would end up no better off, with all or more of their increase in income taken in tax and national insurance contributions, or lost in benefits forgone.

That is the situation that demands reform. But those who claim to have found a quick, cheap way to dispose of the poverty and unemployment traps deceive themselves. The problem has grown up almost entirely

because Governments for 30 years or more have increased benefits in line with earnings, but raised personal tax thresholds only in line with prices, which have grown much more slowly over the years. In 1950 the tax threshold for a married man was about two thirds of average earnings. Today it is barely more than one third.

A situation that has built up over 30 years cannot be put right in one Budget or even in one Parliament. These problems have arisen, and the point cannot be emphasised too strongly, not because Government spend too little, but because successive Governments have spent and taxed too much. The substantial increase which I have proposed in child benefit will improve work incentives for the low paid; and several of the measures we have taken since 1979 have reduced the unemployment trap. But it is only by limiting public spending, as we have done, that we can begin to get to grips with the problem along the lines I now propose.

PERSONAL TAX

In 1979 I reduced the basic rate of income tax from 33 per cent to 30 per cent. and cut the top rates. That was one of the first, and most radical, of the many changes that found a place in my first four Budgets. This year we can cut personal taxation again. But I do not propose any further reductions in rates. For the reasons I have just given it is thresholds and allowances that must take priority.

Two years ago, in order to curb inflation and allow lower interest rates, income tax allowances were not raised at all. That was a difficult decision, but necessary in the circumstances, and it has since brought great benefits. It was the firmness of that 1981 Budget which paved the way towards the lower inflation and lower interest rates which today offer the prospect of lasting economic recovery.

It is right that the benefit of the sacrifices of 1981 should be enjoyed now by those who made them then.

Last year I increased tax thresholds and bands by 14 per cent. This year I also propose an increase of 14 per cent. But because inflation is today so much lower, that now represents a real increase of not 2 per cent. as last year, but 8·5 per cent.

Income tax thresholds will be increased for the single person from £1,565 to £1,785 and, for the married man, from £2,445 to £2,795. The additional personal allowance paid to single parents, and the widow's bereavement allowance, will be increased in consequence from £880 to £1,010 The age allowance for a single person will go up from £2,070 to £2,360, and for a married person from £3,295 to £3,755.

Corresponding increases will be made in the higher rate thresholds and bands and the threshold for the investment income surcharge.

Effect will be given to these changes under PAYE as from the first pay day after 10 May. For a married man on the basic rate they will be worth £2 a week. The cost to the PSBR, above indexation, will be £1 billion next year. Including indexation, the total revenue forgone will amount to some £2 billion in 1983–84 and £2·5 billion in a full year. Some 1,250,000 fewer people will pay tax in 1983–84 than if thresholds had remained at their present levels.

CONCLUSION

At the start of my speech I referred to the objectives this Government adopted in 1979, objectives to which we have held and still hold. From my first Budget we have pursued those objectives with consistency and firmness of purpose and so laid the foundations for sustainable recovery.

This is a Budget for that recovery: a Budget for the family, a Budget for enterprise—and, most of all, a Budget for Britain's continuing recovery. I commend it to the House.

Mr. Deputy Speaker: Under Standing Order No. 94, the first motion, entitled "Provisional Collection of Taxes", must be decided without debate.

PROVISIONAL COLLECTION OF TAXES

Motion made, and Question,
That pursuant to section 5 of the Provisional Collection of Taxes Act 1968 provisional statutory effect shall be given to the following motions—

(a) Spirits (Motion No. 2).
(b) Beer (Motion No. 3).
(c) Wine (Motion No. 4).
(d) Made-wine (Motion No. 5).
(e) Cider (Motion No. 6).
(f) Tobacco products (Motion No. 7).
(g) Hydrocarbon oil (Motion No. 9).
(h) Vehicles excise duty (Motion No. 10).—[Sir Geoffrey Howe.]

put forthwith, pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.

Mr. Deputy Speaker: I shall now call on the Chancellor of the Exchequer to move the motion entitled "Amendment of the Law". It is on that motion that the Budget debate will take place today and on succeeding days. The remaining motions will not be put until the end of the Budget debate next week and they will then be decided without debate.

Budget Resolutions and Economic Situation

AMENDMENT OF THE LAW

Motion made, and Question proposed,
That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of—

(a) any amendment with respect to value added tax so as to provide—

(i) for zero-rating or exempting any supply;
(ii) for refunding any amount of tax, otherwise than by a provision relating to supplies to, and importation by, a government department, within the meaning of section 19 of the Finance Act 1972:
(iii) for varying the rate of that tax otherwise than in relation to all supplies and importations; or
(iv) for any relief other than relief applying to goods of whatever description or services of whatever description; or

(b) any amendment relating to the surcharge imposed by the National Insurance Surcharge Act 1976 and applying to some only of the persons by or in respect of whom the surcharge is payable, other than—

(i) an amendment providing for a different rate of surcharge to be paid by the bodies specified in section 143(4) of the Finance Act 1982; and
(ii) an amendment relating to the Commission to be established under the Act resulting from the National Heritage Bill [Lords].—[Sir Geoffrey Howe.]

[Relevant documents: European Community Documents Nos. 10337/82, Annual Economic Report 1982–83, together with the final version as adopted by the Council, and 10480/82, Annual Economic Review 1982–83, together with paragraph 7 of the Fourth Report from the Select Committee on European Legislation, House of Commons Paper No. 34-iv of Session 1982–83, and paragraph 4 of the Eleventh Report from the Committee, House of Commons Paper No. 34-xi of Session 1982–83.]

Mr. Michael Foot: It is part of the ritual of Budget day that the first speaker from this side of the House congratulates the Chancellor of the Exchequer on his performance. I certainly do not wish to depart from that tradition, at least for the first few minutes of my speech. I naturally accord him congratulations of the kind that previous Chancellors of the Exchequer have been accorded on the way in which they have presented the Budget to the House. I congratulate the right hon. and learned Gentleman on that basis.
Those of us who have been in the House for some time with the right hon. and learned Gentleman know that he has a great capacity for being clear when he wants to be and that when he is obscure it is also intentional. We must take that into account, particularly when examining the right hon. and learned Gentleman's proposals for dealing with pensioners. It appears that the right hon. and learned Gentleman may have received some assistance from the Secretary of State for Employment on these matters, and if that is so we must examine them all the more carefully. We shall do so with great care during our Budget debates and I shall return to that shortly.
The Chancellor of the Exchequer recalled some previous Chancellors of the Exchequer, such as Mr. Gladstone and Mr. Disraeli. In my judgment, he was not


quite as witty as Mr. Disraeli or quite as wise as Mr. Gladstone. Indeed, he reminded me more of another 19th century Conservative Chancellor of the Exchequer, particularly when he approached the more agreeable parts of his speech. I refer to Sir Robert Peel, of whom it was said that his smile was like a silver plate on a coffin. The right hon. and learned Gentleman approached the issue somewhat in that spirit. He announced his measures with a certain grisly bonhomie, and we must give him credit for that.
If I may say so without any disrespect, perhaps the wisest words that have been uttered today were those said by Mr. Deputy Speaker just as the Chancellor of the Exchequer began his speech. He said that the Chancellor should start again, and that is no doubt what the right hon. and learned Gentleman should have done. Both we and the country wish that we could return to that day four years ago when the right hon. and learned Gentleman presented the first of his Budgets. I remind the House, and particularly those who cheered a few minutes ago, that it was Mr. lain Macleod who, I think, suggested that the Budgets that received the loudest cheers were those that brought disillusion the quickest. When the words of the Chancellor of the Exchequer are examined, disillusion often follows very quickly.
That will be true of this Budget, mainly because the Chancellor of the Exchequer has made no real effort to deal with the fundamental industrial and economic situation facing Britain. This Budget, this Chancellor of the Exchequer and this Cabinet are squalidly inadequate to deal with the problems of industrial decay and mass unemployment that face the nation. The overriding factor in the world in which we live is hyper-unemployment. That is the major problem that faces the nation. The Government claim that they have not in any way caused that hyper-unemployment. Indeed, they say that they can do nothing about it. The right hon. and learned Gentleman says that unemployment is intractably high. Of course it is appallingly high, but the right hon. and learned Gentleman uses the word intractable to suggest that nothing can be done about it. The Government have sought to preach that to the country over the weeks and months.
The Government say that the situation is worse in other countries, that our unemployment is just part of the world slump, that nothing can be done about it or that there is no alternative. We must show the country how this Budget merely extends that interlocking network of falsehoods and does nothing to deal with the problems.
The Chancellor of the Exchequer referred with some pride to his 1981 Budget, but that Budget is one of the reasons for the record unemployment in this country today. The clearest and starkest failure has been the destruction of jobs. The Government have destroyed jobs on a scale unknown since 1945. In three and a half years, one in 10 jobs in this country has been destroyed. This Government will be the first since the war to have destroyed jobs. For 35 years after the war jobs were created, but in three short years this Government have reversed all that. In few other countries have jobs been destroyed at all, and where they have been, the scale of destruction has been negligible compared with that in Britain.
Job destruction in manufacturing has been even more spectacular. More than one fifth of manufacturing jobs

have been lost in Britain. Again, that is on a scale unmatched in any previous period of British history or by any other country in the present period. Although the Government have recently cited one or two other countries—I think that the Chancellor of the Exchequer mentioned them again today—such as the Netherlands or Germany, where the rise in unemployment is similar to our own, they are the exceptions and in neither case is the scale of job loss anything like as great as it is here. That is the result of the collapse in output. Nothing that the right hon. and learned Gentleman said will restore the situation.
None of this is surprising if we look at what has happened to production. The fall in output under this Government far outstrips anything suffered by any other country for which figures exist. With the exception of Canada, no other industrial country has suffered a loss of output during the period for which the Chancellor has presided over our economic affairs.
The right hon. and learned Gentleman has predicted recovery once again today, although his predictions are a great deal more tentative than they were a few years ago. This time he plumped for a figure of 2 per cent. as the likely increase. Up till now output has fallen by 5 per cent. from the first half of 1979, so a huge increase is called for and there is a huge backlog to be made up. Even with the increase predicted by the Chancellor, manufacturing will be 18 per cent. down from the second quarter of 1979, and the construction industry will be 10 per cent. down. Of all the trivial measures in this trivial Budget, nothing was more trivial than that offered to the construction industry. The measures offered to it were pitiful.
The Budget fails to deal with the real world. I went the other day to the Shildon works, which is part of the real world. The threatened closures there will add to the heavy unemployment figures. They will destroy a whole community and help to spread the industrial disease to many other parts of the country, because the coal and the steel used at the Shildon works will no longer be required, and that will have its reverberations.
The Government do not seem to understand the interlocking industrial measures between these great industries. They hit one industry and do not understand how that hits the others. What do they think will happen in the years to come? Are we not to want any of the wagons made at Shildon? In two or three years' time, once the Government have destroyed the industry, scattered the community and destroyed the capacity and the skill to produce these wagons in Britain, we shall have to import them. What is happening at Shildon is what has happened up and down the country. One can multiply it on a huge scale. It is only an example of the catastrophe wrought by this Government.
Why does not the Prime Minister listen to her favourite industrialist on this subject? The Government appear to deride spending and the Chancellor almost repeated the creed that spending is a dirty word. However, Mr. MacGregor said a few months ago:
Greater spending on major projects, like roads, bridges and sewers, is called for … It was tragic that the Prime Minister was having to tell local authorities to avoid spending money on capital projects. This would be costing jobs in the British Steel Corporation.
One can multiply that up and down the country. That is why we have a steel crisis.
If the right hon. Lady and the Chancellor do not understand that, they had better ask Mr. MacGregor


whether he agrees with us. The collapse of the market in steel and the injury to the market in coal are reverberating from one major industry to another, but they may not understand these things in Finchley or Surbiton, where they do not produce the real wealth of the nation.
The right hon. and learned Gentleman had the nerve to speak of small businesses and what he was proposing to do for them. He spoke of his start-up scheme for small businesses. What about his close-down scheme for smallbusinesses? The Prime Minister and the Chancellor have been responsible for closing more small businesses than any other Government in British history. Bankruptcies have been running at an all-time record of 30 a day during recent months. That is what is happening to the small businesses of this country. Under this Government company liquidations have been 50 per cent. higher than under the previous Government. In 1982 the number of liquidations was twice as great as in any year before 1979. The Government should have a little diffidence in approaching the problem of how they are to help small businesses. There is a long queue of small business men whom they have driven to the wall.
All this is partly due to the policies and the theories to which the Prime Minister and the Chancellor are wedded. They are wedded to the course outlined by the right hon. and learned Gentleman today. The most menacing phrase that he used was that he was determined to continue along the same course. The course is one of impoverishment for the industry and people of this country.
That was the indictment by someone who is as expert on these matters as any of the monetarist theorists who advise the Government. It would be a poor compliment to him to mention him in the same breath as the Government's advisers. Perhaps hon. Members have read the article that appeared in The Observer a few weeks ago by Sir Alec Cairncross on the obligations of Governments to those who become unemployed and on employment policy. He said, and this is very much concerned with what is not in the Budget:
The most remarkable thing about the depression into which the world has plunged is that Governments seem determined to wash their hands of it as if it were none of their business".
We had another exhibition of that nature today.
Sir Alec went on to say:
Employment policy, born in 1944, is officially dead. Yet it has been Governments that have brought about the depression and their policies that are continuing to drive up unemployment and put the world at risk.
There is no mystery about the world slump. The prime cause has been the efforts of Governments to try to get on top of inflation by tight monetary and fiscal policies. These have reduced purchasing power and effective demand well below the potential of which their economies are capable.
That is what is happening in this country and in so many other countries where similar policies are applied. It applies also to the right hon. and learned Gentleman's boasts about bringing down inflation. Of course, in a world slump prices go down. One can cure inflation by the methods of the world slump. In the 19th century, Cavour said that any fool can govern by martial law and any fool can cure inflation by massive slumps. The necessity is to try to deal with the problem without forcing us into a recession.
That is what Sir Alec Cairncross said in the article in which he gave his warning a few months ago, before the inflation rate started to go up again. He said:

Inflation has not been 'cured'. The fact that it is lower now than it was last year, or the year before, provides no insurance that prices will not increase faster once employment at last begins to rise again".
While we are cursed by a Government who are determined to make none of the efforts necessary to escape the slump of a recession in which we are fixed, that will always be true.
Some of the measures that the right hon. and learned Gentleman has proposed deal with taxation. I understand that some Conservative Members do not like to discuss the real world outside before we come to these problems, but this is real enough for those who are queuing on the dole queues, on a scale that the country has not known for generations. The taxation policies of the Conservative party, and in particular the taxation policies introduced by the right hon. and learned Gentleman in his first l3udget, have been a major contribution to the recession arid are a breach of the election pledges on which the Government were elected. Far from reducing income tax at every level, the Government reduced it at only one level, the very rich level. Today's measures do not make up for the heavier taxation imposed over the past year—nothing like it.
Only one tiny bit of the £9 billion taken away by the Government has been restored. Nothing like the 9p mentioned by my right hon. Friend the Member for Stepney and Poplar (Mr. Shore), which would have been required to restore what has been taken away, has been proposed. Nothing has been done about the increase in VAT introduced by the Chancellor of the Exchequer in his first Budget, contrary to his election pledges. The increase in VAT from 8 to 15 per cent. in 1979 is still taking £5 billion out of the economy. It is all part of the Government's determined, persistent deflationary policy. There is a list of people who have had huge sums taken from them by the Government's taxation policies and have not had them restored by what the Government have done today.
Today's Financial Times article on the background to taxation was not by Labour party propagandists but by a brokers Laing and Cruickshank, who say:
The United Kingdom tax burden in 1982 represented 32·5 per cent. of total national income. This has risen steadily during the period of the present Government from 28·4 per cent. in 1979.
That is the background against which these taxes are proposed. Some of the huge increases and burdens imposed upon different sections of the community have been partially restored. We are glad to see child benefit increased, although we believe that it should be increased further. We introduced child benefit and it was one of the major social reforms of the period. We want to see it built up, and although we welcome the increase we believe that it should have been a £2 increase.
We are glad that the mean, miserable and utterly indefensible 5 per cent. cut for unemployed people has been restored. However, the mass of unemployed people who have been thrown out of their jobs through no fault of their own have considerably lower incomes than would have been the case if the Government had sustained the forms of employment insurance and benefit that they inherited from us.
The right hon. and learned Gentleman attempted to claim that the 5 per cent. pension increase—if we accept his figure—was a tremendous advance. We shall examine with the utmost care how he is proposing to deal with pensions, how he is proposing to change from the present


system and the percentage inflation figure to be applied. Even so, pensions do not come within miles of the form and rates of advantage to pensioners that were provided by the Labour Government.
During the period—[Interruption.]—from 1974 to 1979 the value of the pension was increased by between 20 and 25 per cent. The right hon. and learned Gentleman is proposing and boasting today about an increase which in real terms is less than 5 per cent. The increase during the Government's term of office is far smaller than that sustained by the Labour Government. The right hon. and learned Gentleman should at least return to the rates for pensions that we established, and he should restore the link between earnings and pensions introduced by our legislation.
We welcome any relief that will assist in bringing people out of tax. If the Chancellor had taken the advice that we offered two or three years ago many people would not have been in tax throughout the period and taxation would have been considerably lighter, and in that case many more people would have been in employment.
That brings us back to the major reason why we say that the Budget, the Cabinet and the Government are utterly incapable of dealing with our problems. I quote again what Sir Alec Cairncross said on this subject—[Interruption.] —I know that Conservative Members are determined not to listen to what he said about how we might be able to restore some employment, but none the less, they have to listen. He said:
We cannot escape from the present depression without a large increase in demand and there is no likelihood of such an increase without an initiative on the part of Governments. It is pure fantasy to suppose that output is bound to recover by itself;"—
which is the Chancellor's theory—
that, amid the scenes of industrial collapse, new businesses will be founded and flourish in the number required while old businesses take heart as never before.
That is what the right hon. and learned Gentleman said in his peroration would happen, but the exact opposite has happened.
The Chancellor says that the Government will not change course. We are determined that the country shall have the opportunity to change course. The loss that the country has suffered during the industrial collapse of the past three years is of historic proportions. It has been greater perhaps in terms of wealth than even the 1930s, although the comparisons are not so easy to make. Keynes said:
There is the far greater loss to the unemployed themselves, represented by the difference between the dole and a full working wage, and by the loss of strength and morale. There is a loss in profits to employers and in taxation to the Chancellor of the Exchequer. There is the incalculable loss of retarding for a decade, the economic progress of the whole country.
During the Chancellor's tenure of office he has held back this country's advance by something like a decade. We are now told that the same course will be persisted in. These measures certainly will not change it.
There is to be a continued trail of human misery for the poorest in the community—the increasing number of people who have to rely upon supplementary benefit to keep families together. A huge mountain of waste for the nation is involved in these figures. There are deep divisions in our society between rich and poor, north and

south and between those who want to secure our escape from this position and those who are denied the right to do so by the Government's policy.
The Budget offers no prospect of recovery to the real world outside even though it received a few ephemeral cheers in the House today. The country needs an entirely new course, and the sooner the Government get out and allow us to put it into operation, the better.

Mr. David Atkinson: I congratulate my right hon. and learned Friend on another first-class, sound and responsible Budget statement. What a contrast this Budget statement has been with those that we have had at the end of the fourth year in office of every previous Government during the past 18 years.
The House will recall that by this stage in the life of every Government since 1964, every Chancellor has reversed the economic strategy upon which his Government had been elected. Chancellors have either been compelled to reduce public expenditure when they would have increased it, or increased public expenditure when pledged to reduce it. Each one introduced wage or price controls when he had pledged not to. The result was that in almost every case inflation and, consequently, unemployment were higher at the end of each term in office than at the start. Each Government subsequently, and many would say deservedly, lost office as a result.
The great hope for the unemployed today lies in the fact that my right hon. and learned Friend has at least clearly taken control of public expenditure. Inflation and interest rates have fallen as a result, and this must mean new jobs in due course. I am, of course, disappointed that my right hon. and learned Friend has not yet reduced public expenditure in real terms. If he had, he would, by this year, and certainly today, have been able to cut the basic rate of income tax beyond what it is at the moment. I believe that this is what he set out to do in 1979. I appreciate fully the reasons why he has not yet been able to achieve this aim.
No party anticipated at the last election the depth of the recession following the rise in the price of oil that took place within weeks of that election. Without the cost of today's unemployment and the massive support that the British taxpayer still gives British industry, we would now be enjoying much lower personal taxation. The aim of my right hon. and learned Friend or his successor must be to reduce the basic rate of income tax. At least no other party in this country aims to spend less of the nation's income and wealth than do this Government. I hope that the country will bear that in mind when the next election comes.
I congratulate my right hon. and learned Friend for keeping his cool over the past four years and for sticking resolutely to his medium-term financial strategy. His refusal to panic means that Britain is today better placed than other countries to prosper from the upturn that more and more evidence suggests is now occurring on the other side of the Atlantic and will, in due course, come to Europe. A feature of every one of my right hon. and learned Friend's Budget statements has always been his enterprise packages for industry in general and small businesses in particular. He has not let us down this time. I welcome particularly the further reduction in Labour's tax on jobs, the national insurance surcharge. Abolition of


the remaining 1 per cent. must surely be a manifesto commitment for the next election if my right hon. and learned Friend has not been able to achieve it before then.
I welcome particularly the further reduction in small companies' rates of corporation tax, the measures to help the building industry, the measures to encourage greater share ownership in companies and especially the expansion of the enterprise allowance to help unemployed people to create new businesses. One of the most encouraging statistics published recently has been the increase in the number of self-employed people to its highest ever level at over 2 million. I know from my experience that there is nothing better for those so inclined than to accept personal responsibility for working for oneself, running one's own business and enjoying the job satisfaction that is to be gained from the service that one gives others. Our continuing aim must surely be the removal of all unnecessary obstacles to and restrictions on enterprise including, where possible, any avoidable burdens placed on small businesses by the imposition of value added tax.
Here I come to my first complaint about today's statement. I believe that an opportunity has been missed. My right hon. and learned Friend announced that he has increased the value added taxable turnover threshold to £18,000. I welcome this as the greatest value of the registration limit since value added tax was introduced. If my right hon. and learned Friend had announced that he was raising the value added taxable turnover threshold to £30,000 a year, no less than 300,000 small businesses would be freed of the burdensome commitment of charging and administering VAT. The gross loss of revenue to the Exchequer would be £65 million which works out at £217 a business. Since the average cost of collecting VAT per business is £105, the net loss of such a move of revenue to the Exchequer in removing these 300,000 small businesses from VAT liability would be £32 million. That represents £112 per business which, I suggest, will be made up in no time from the corporation tax that will be generated by the activity resulting from being freed of such constraints.
We will be told that such a move is contrary to article 24(2)(c) of the European Community directive on VAT. The logic of my argument surely applies to every similar sized business throughout the European Community. As this year is the European Parliament's year of small and medium-sized businesses, designed to focus on the role and needs of the smaller business in Europe, it would be an appropriate year for Britain to urge on the Community that it can make a major contribution towards improving the climate for enterprise by raising the real level of VAT threshold and freeing many small businesses from this commitment—

Mr. John Evans: Does the hon. Gentleman not agree that the greatest opportunity missed today was the Chancellor's failure to reduce VAT back to 8 per cent., its level when the Tory Government took office, which would have affected millions of people?

Mr. Atkinson: We have always made it clear that we prefer to encourage incentive in the economy by reducing direct taxes instead of indirect taxes. I believe that that is right. I hope that my right hon. and learned Friend will consider that such an initiative would earn the gratitude of every small business in this country and in Europe.
There are two other disappointments that I should like to express about VAT that are directly relevant to businesses in my constituency. I appreciate that they may be regarded by some hon. Members as significant. They are, however, significant to the industries and businesses concerned. I am sorry that my right hon. and learned Friend has not responded to the representations from the industry to remove VAT from—no less—ice cream. Far more ice cream is eaten today as a food than as a confectionery. Food is VAT-free. Ice cream is not. That anomaly, I regret, has not been corrected. I hope that the Government will introduce an appropriate amendment in Committee.
My next complaint concerns the continued imposition of VAT on language schools, of which there are many in my constituency. The teaching of English as a foreign language is education. As hon. Members know, education is zero-rated for VAT. The schools, however, are not zero-rated because they are regarded as businesses. Yet language schools are everywhere classified as schools of further education. They are also an export business. They have long been a source of earnings to this country, competing strongly against teaching organisations and schools that do not suffer from the imposition of VAT in other countries. I hope that further thought will be given to eliminating this anomaly.
My retired constituents—there are many of them—will be delighted by my right hon. and learned Friend's announcement that he has been able to abandon his proposed clawback of last year's award because he had underestimated his success in reducing inflation. If it had been the other way round, there would have been instant demands to make up the shortfall. I had thought at this stage that I would be saying that a better system could surely be found than that under which pensioners have to wait half a year before receiving their announced increase, by which time they believe that it has been eroded by inflation. Instead, I can congratulate my right hon. and learned Friend on his plans to return to the old system based on the actual rise in prices. This will put an end to much cynicism among pensioners.
One disappointment that pensioners, like all those who have accepted a greater responsibility for their health needs, will feel is about my right hon. and learned Friend's failure to use his statement to introduce tax reliefs for individual and family subscribers to private health insurance schemes. These people, by and large, do not use the National Health Service extensively. However, they still pay for it and, in my view, they deserve tax relief. This is just as important as the raising of the mortgage tax relief threshold for young couples buying their first home.
I shall nitpick no more. The Chancellor of the Exchequer has again presented a first-class Budget. It may well be his last. I believe that this country will have cause to thank my right hon. and learned Friend for the foundations that he has laid for the prosperity that has been brought closer by his statement today.

Mr. Roy Hughes: The Budget is the occasion when the Chancellor of the Exchequer presents his progress report to the nation. He tells us what additional revenue is required and what concessions, if any, can be made to the taxpayer. He is the manager of the nation's economic affairs. It could be said of the


present incumbent of that important office that he is a record-breaker in a unique way. He has brought about record unemployment, a record fall in output, together with minimal investment in our manufacturing industry, which is vital for the future of our country. It is apparent that manufacturing industry has been brought to its knees, as the director general of the CBI, Sir Terence Beckett, points out from time to time.
The verdict on the Chancellor's management of our economic affairs is borne out by the length of the dole queues. So the whole purpose of my intervention, which will be very brief, is to pose the fundamental question: will the Budget reverse the upward trend in unemployment? The answer must be a categorical no.
Let me deal with the specific proposals in the Budget. There is to be a massive intervention in pay-as-you-earn. There is to be £2 per week for a married man paying the standard rate of income tax. That is a monumental proposal in view of the present economic state of the country. I do not doubt that it is a step in the right direction, but it is minimal, to say the least.
In the proposals that were put forward a week or so ago by my right hon. Friend the Member for Stepney and Poplar (Mr. Shore), the shadow Chancellor, he suggested that those on or below £250 a week would pay less taxation and those above that figure would pay more. It is not difficult to see the egalitarian nature of those proposals. My right hon. Friend's suggestions on tax allowances would take 1 million people out of tax. The Chancellor's proposals are pretty puny by comparison. The same applies to the increases in child benefit. We proposed an increase of £2 a week. Compared with that, the Chancellor's measure is inadequate.
Then there is the need to help those who are in the unfortunate position of being unemployed, particularly as a result of the slump, which is essentially Government-created. Again, the help for those people is inadequate, to say the least. At one time my constituency of Newport was a booming industrial town, but now it has almost 20 per cent. male unemployment. A group of social workers carried out in certain districts a study in my constituency into the effects of unemployment. It vividly illustrated the poverty, despair and mental illness caused by unemployment. I should have thought that the Chancellor's prime duty today was to try to combat the massive unemployment that has swept our country.
The Chancellor of the Exchequer could have helped by a massive increase in social spending, and not only for the younger elements in our society. One cannot help but admire the way in which the pensioners put their case. A range of options was open to the Chancellor today to help pensioners. The Christmas bonus could have been doubled to £20. That would have been most welcome. The Chancellor could have introduced free television licences, at a pretty low cost. I, and no doubt many other hon. Members, have received many representations about an increase in the death grant, but the Chancellor chose to do nothing about that.
Pensioners need a better deal on heating arrangements. Many of the ailments and complaints of old people can be attributed to that source. Then, too, the Chancellor could have done something about a national concessionary scheme for fares on public transport, to keep old people mobile and interested in affairs, and to enable them to visit

relatives, go shopping and visit places of interest which they were unable to do during the course of their hard working lives. In particular, he could have helped pensioners who have a little capital—those who have saved a little money during their working lives. The supplementary benefit scheme should be modified on a sliding scale to ensure that those people are not unduly penalised for their small amount of capital.
The upper ceiling of national insurance contributions of £220 could have been abolished, with no hardship to the people in that income bracket. The 45 per cent. tax band could have been lowered. The change in the mortgage relief limit from £25,000 to £30,000 is again a gift to the better-off section of the community and is most unfair when one thinks how council house tenants have been hammered with increased rents.
There is the usual taxation of motorists. This year it has been made more plausible in that it is alleged that it is merely keeping in line with inflation. That does not alter the fact that the motorist is always caned, year after year. What is more, the money is not going back into our roads.
The Labour party has put forward proposals to help the poor and the needy. Such proposals are met with cynicism. We are asked how they will be paid for by the same people who readily vote £10 million for the Trident project. The steelworks at Llanwern is fighting for a concast plant to preserve jobs. I understand that the cost will be about £100 million. I compare that with the £800 million that is to be spent on a runway at Port Stanley airport in the Falklands.
Perhaps the greatest scandal of all is the £15 billion that is paid annually to people in the dole queues. Above all else, we must put those people back to work so that they can do something useful and produce new wealth. I agree that the Chancellor has moved a little this afternoon, but what he has done is a mere pinprick compared with what is needed to answer Britain's problems. The position is essentially one of despair, when our people need hope.
The media, in support of the Conservative Party, have not focused on the real issues of unemployment at all. They have merely been involved in the character assassination of some Labour leaders, whether it be my right hon. Friend the Member for Bristol, South-East (Mr. Benn), Mr. Scargill, Mr. Livingstone or Mr. Tatchell. Some people are being fooled by that, but all the people cannot be fooled all the time. I forecast that after the general election we shall see a Labour Chancellor steering Britain once again on the road to recovery.

Mr. John Lee: That my right hon. and learned Friend the Chancellor of the Exchequer had a fairly pleasant task in the drawing of his Budget was because of the courage and steadfastness that he has shown in his earlier Budgets, despite criticisms from Back Benchers—including, from time to time, me. However, overall the Budget is excellent. It is prudent and humane yet enterprising. It strikes a fair balance between benefits to industry and help to the individual and the family.
The further reduction in the national insurance surcharge will be most welcome to industry. The reintroduction of the small engineering firms investment scheme will be much appreciated by many engineering firms in Britain—those in north-east Lancashire as well as those in the west midlands to which my right hon. and


learned Friend referred. In addition, the reduction in interest rates during the past 12 months and again today will be welcome.
For the family and for individuals there is the restoration of the 5 per cent. abatement in unemployment benefit for which several of my hon. Friends have campaigned, and all credit to them for doing so. A further 1·25 million people are being taken out of tax by the increase in personal allowances. The pension increases are welcome. Between 1979 and 1983 they have increased by 75 per cent. compared with a 70 per cent. increase in prices. There is also a welcome increase in child benefits, help for bereaved widows, the removal of the invalidity trap, as it was described by my right hon. and learned Friend this afternoon, and the capital threshold for the provision of supplementary benefit has been raised to £3,000.
A series of measures have been announced this afternoon to help and encourage the establishment of new businesses. The business start-up scheme has been improved, the loan guarnatee scheme has been extended and free ports have been announced. I particularly praise the decision to go national on the enterprise allowance scheme. I have perhaps spoken more on the enterprise allowance scheme than any other Back Bencher. I have seen the scheme work successfully in one of the pilot areas in my constituency in north-east Lancashire. We have led the field nationally in the application of that scheme. It has been operational for just over a year and more than 1,000 people have applied to start business under it.
In my local authority of Pendle 200 people started up in business because of the enterprise allowance scheme and the vast majority are extremely successful. They cover a range of business activities—service industries, retail businesses and small manufacturing operations. Having monitored and promoted the scheme in north-east Lancashire, my experience has been that many of the businesses that were set up under the scheme would probably have been set up anyway. That was one criticism of the amount of money that has been spent on the scheme. However, I am convinced that the fact that there was £40 a week available for small businesses for 12 months has finally pushed some of those who were hovering on the brink to start up in business on their own. It has provided them with that extra guaranteed liquidity and income in the vital first 12 months when a business is most at risk. It was an excellent innovation. In addition, it has helped to bring some small businesses out of the black economy.
I am delighted that the Chancellor announced a £25 million national cash limit for that scheme for 1983–84 which is designed to provide about 25,000 new small business opportunities for applicants under the scheme. I encourage all hon. Members to do everything possible in their constituencies to promote the enterprise allowance scheme. It is a first-class scheme, as I have seen from its operation.
I made my maiden speech in the Budget debate of June 1979 in praise of the Budget presented then by my right hon. and learned Friend. I am happy this afternoon to make what will probably be one of my last speeches in this Parliament, in support of my right hon. and learned Friend's 1983 Budget.

Mr. Jim Craigen: Everyone expected that this would be a good Budget. After four

years of this Administration, we deserved at least one good Budget. There seemed little doubt of that, because the Chancellor has two forthcoming by-elections on his mind. Frankly, I think that Budget day is a somewhat overrated occasion. With the complexity of present-day issues I wonder whether it is the best way to manage the nation's economy.
The Chancellor missed an ideal opportunity to make amends for the adverse measures that he imposed on the low-paid in Britain when he abandoned the 25 per cent. lower band rate. After spending some time this afternoon talking about the problems of those on low incomes he more or less dismissed the opportunity to put right that error. It is not good enough to suggest that to restructure tax would take more than a Parliament. After all, he has had a longer term than most Chancellors in which to do something in that area. The Government have cheated the low-paid, because there is little incentive in the Budget for those families that are in difficult financial circumstances. Those who made the sacrifices in 1981 will not necessarily be the beneficiaries of the 1983 Budget.
One is pleased that the pledge to restore the abatement of unemployment benefit is being redeemed on this occasion, but what a struggle it was to convince the Government that that should be done. What anguish there was on the Government Back Benches on the various occasions when abatement was debated. A good many Government Back Benchers were sorely tried on those occasions. Some of them had the courage to vote against their Government on the issue and others abstained.
It appeared to me that as the Chancellor was unfolding the four special measures to deal with the problem of the long-term unemployed he relied even more than he did last year on measures such as job splitting and part-time employment. In effect, three of the schemes are designed to take people off the unemployment register in circumstances where it is felt that there would be no other way of removing them from it. This hardly seems an inspiring approach at a time when the Manpower Services Commission is warning that by the end of this year 1·25 million people will be in the long-term unemployed category, although I believe that the figure is more likely to be 1·5 million.
In addition, a dangerously large number of people have been unemployed for more than six months hut just under 12 months. For the time being it appears that we will have to rely totally on the rather inadequate community programme, which proposes only 130,000 jobs, some of which will be full-time and some of which will be part-time. This, in effect, is the mismatch between the level of long-term unemployment and the provision which the Government feel it necessary to make.
One always welcomes measures to help the construction industry, because, by and large, it is a cost-effective means of introducing employment opportunities into the community. The Chancellor mentioned the special problems of inner city areas. I know something about such areas and one of the greatest difficulties facing many of our inner city areas is that, by constant retrenchment on the rate support grant and on the availability of Government support for local authorities around the country, those with responsibility for inner city areas are having to cut back on the level of services.
Maintenance and repair budgets are invariably a prime target for local authority economies. The maintenance and repair budget under the various departmental headings is


usually quite substantial. It is easy to make what appears to be a saving today but which, in a few year's time, becomes a false economy. When the Chancellor is trying to juggle types of assistance that might be made available to inner city areas he should bear in mind that the level of assistance available to local authorities largely determines the quality of services in those areas.
My hon. Friend the Member for Newport (Mr. Hughes) referred to public transport. Many of our constituents depend upon public transport. There is little in the Budget to suggest that the Government recognise the need to assist the bus industry and the travelling public. This involves not only pensioners travelling about but people travelling to their work or the unemployed, who find it rather difficult to bear the travelling costs of job search.
We like to see measures designed to assist the development of small businesses, although my experience from talking to business men is that problems arise not in starting up a small business but in keeping it going. Here the level of demand is the great determining factor in how successful many of these small businesses will be. If a careers adviser were suggesting new growth areas for would-be applicants in the foreseeable future, work as a liquidator or a receiver would be good suggestions. There has been an unhappy buoyancy in that corner of the market.
With regard to inflation, which has become central to this Government's economic policy—in so far as one can discern an economic policy—the retail prices index has now taken on an importance in the management of economic affairs which it does not deserve. We should examine more closely the way in which the retail prices index is compiled and the shift that has taken place in the weights attached to the measurement of the retail prices index. It means different things to different people in different parts of the country. There is little doubt, especially on a day on which the Chancellor has announced an increase to £30,000 for interest relief on mortgages, that many folk could not consider a £30,000 mortgage, far less get hold of one.
While I am in favour of measures to assist home ownership, the number of people now in the home buying category who are benefiting from the reduction in interest rates is influencing the measurement of the retail prices index. If we consider this more closely, we see that those who pay rent are disadvantaged because there has been a sizeable jacking up, as a result of Government policies, in the level of rents. That trend has been accentuated by measures such as mortgage interest relief at source. Such a measure may not help the building societies cash flow, but it helps the cash flow of those paying mortgages. It therefore widens the gulf between the north and the south, in that the preponderance in the south is of home ownership, whereas the preponderance in the north is largely of rented accommodation. I earnestly suggest that the way in which the retail prices index is made up should be examined. There are all sorts of implications for wage bargaining, as the Chancellor pointed out this afternoon, for the allocation of Government resources to the rate support grant and indeed, for the general conduct of economic management in this country.
There is an absence from the Budget of adequate measures to deal with unemployment. What is happening on the unemployment front should worry Members of

Parliament. A teacher told me the other day that he had asked his class of 16-year-olds how many expected to get a job when they left school. Not one hand out of 24 went up. When he asked how many of them expected to get a job by the time they were 21, only three hands went up. That is depressing. The enterprise allowances will not overcome that brick wall, which, unfortunately, faces too many young people when they leave school.
This country needs a sense of direction. There is no doubt that more people are ceasing to be kidded by the fiscal measures every March or April in the Budget. There is a lot more cynicism and sophistication about those matters than politicians will openly admit.
When the Chancellor was unfolding the contents of his Budget I wondered where the money that was being handed out was coming from for many of those small and, at the end of the day, relatively unimportant little schemes or projects that he mentioned to stimulate activity here and there. It was interesting that he paid special attention to the west midlands. That area has felt the full blast of the Government's economic mismanagement. I should have liked to hear a little more about special measures to help areas such as Scotland, which have equally lost out due to the Government's economic policies.
We have now had five budgets from the present Chancellor. I suspect that he is still keeping his options open in case there is a sixth Budget, because the election could be in 1984. However, I hope that for the sake of the economy we are spared a sixth Budget from him.

Mr. Chris Patten: As the hon. Member for Glasgow, Maryhill (Mr. Craigen) said, the Budget is one of the great ceremonial moments in our political and economic calendar. Taken with the public expenditure White Paper, which we debated in an even more crowded Chamber last week, it represents a distillation of the Government's economic strategy and political philosophy. It is in that sense that I shall talk about the Budget.
I should first, however, like to make one or two microjudgments about the Budget. I am extremely pleased that the Chancellor increased tax thresholds as he did. It is the best way of helping the poorer-paid workers and undoes some of the problems that resulted from the Budget in 1981. The Chancellor believes that his decision that year was unshakeably right. It is part of the Chancellor's admirable consistency and charm that he believes that most of the decisions that he has taken about the economy have been unshakeably right. We are all entitled to our opinions. At least on this occasion I agree with what he has done about the thresholds. I also agree with what he has done on child benefits. I am pleased about the restoration of the 5 per cent. abatement in unemployment benefit, on which some of us have made speeches and done other things in the past. I am also delighted that he has not clawed back the pension as at one time he seemed to be threatening to do. I did not think that that was likely as there will be an election in the next 12 months, and even Treasury Ministers—we hope all of them—have elections to fight.
I was also pleased that the Chancellor made a further cut in the national insurance surcharge, albeit only a small 0·5 per cent. cut in that iniquitous tax on jobs. That is that, as far as the Budget is concerned. There are one or two measures to help small businesses. I do not think that it is


unfair to say that the impact of those measures is unlikely to exceed by a substantial margin the magnitude of their cost.
I refer now to the overall impact of the Budget. I do not want to sound too excitable. It is sometimes said about those of us who believe that the present levels of unemployment are too high, which at one time we were told would be a passing phenomenon as inflation was abated, but which are now more permanent, that we are underestimating the robust spirit and independent-mindedness of those who are out of work for six, nine, 12 or 18 months. It is also said that we underestimate the political cynicism of the 87 per cent. of the population who have jobs.
That might all be true. Perhaps that is what the world is like. Perhaps we can be reasonably relaxed about so many young people spending so much of their lives on the dole, even after they have done a training scheme. Perhaps we shall not have to pay the consequences in terms of the alienation of that generation from society, although I would not have thought that that was necessarily the lesson that one would take from Northern Ireland. Perhaps our industrial democracies can withstand the strain on our social fabric and institutions of continuing high unemployment. Perhaps The Times was right in the staggeringly insensitive and intellectually Neanderthal leading articles on the economy recently that made Montagu Norman sound like a cross between William Beveridge and John Maynard Keynes. Perhaps The Times was right to argue that numbers do not matter when one is talking about unemployment, whether it is five, 50, 500, 5,000, 50,000, 500,000 or 500 million. Perhaps that is right, but I do not believe it for a moment. People who suggest that that is so are taking a terrible risk and are almost literally playing with fire.
I am not claiming that we can tackle the problem of unemployment and the recession alone. In that sense the Budget is to some extent irrelevant. It does no harm. It is conceivable that it may have done a little good. However, even within the constraints in the international sphere that stop us doing much more on our own, we could have done more to hurry recovery along and make sure that it is not anaemic and shortlived.
I have disagreed with the Treasury for a long time about the level of the public sector borrowing requirement. It is too low, it is restrictive and has a contractionary effect on the economy. I accept that it is true that the markets believe what the Chancellor tells them about the central importance of the PSBR as a yardstick of fiscal rectitude, but let it be said that it is a yardstick that no other country like us would dream of using. If that is so, it is time to educate the markets as well as the Treasury. We should remind them that by any economically literate criterion, the country is in a surplus on its accounts. That is what the Institute for International Economics in Washington said before Christmas last year. It is true, as the stockbrokers Lang and Cruikshank said recently, if one adjusts the figures for inflation. It is interesting that only Treasury Ministers nowadays, when looking at their own sums, suffer from the money illusion. It is true, as the stockbrokers, Simon and Coates said, if one adjusts for unemployment.
As Helmut Schmidt, whom we used to quote a great deal as our favourite Social Democrat, said in an article in The Economist a few weeks ago, the British fiscal stance is too contractionary and we could and should be a great

deal more expansive in the next few weeks and months. We should read that article to the markets and explain to them that it is a little odd to expect the American economy by being more expansionary in fiscal policy to pull us out of the recession, when we seem to be unwilling to try to escape by being a little more expansionary at home. I accept that even with a slightly larger PSBR and even if we had been able to scrap, as we should have done, the national insurance surcharge, we could not have made a great deal of difference.
My main criticism of the Government in that sense is that we have not always done even that little which we could effectively do. But for substantial results we shall have to look forward to the Williamsburg summit and to the agreements reached there. I hope that there will be an agreement on stabilising exchange rates; I hope that there will be an agreement that the OECD countries should do a little more to concert the expansion of our economies. In other times we might have used the word "reflation".
There are one or two comforting signs. We saw Mr. Volcker giving evidence to Congress the other day and saying:
We cannot build a successful policy against inflation on continued recession.
Then we heard Mr. Shultz speaking to Congress and saying:
the only lasting solution to the income-earning problem of the less developed countries, as well as the serious problems of the industrialised countries, is sustained economic growth".
I am sure that that is absolutely true.
What we need is not the discovery of a new plan, a new theory, but a display of old-fashioned political will to make the international decisions to concert an economic recovery. It is time the visible hand of politicians rather than the invisible hand of the market took a part in the proceedings. Only if we do that will we stand the remotest chance of restoring our prosperity, of saving welfare capitalism—I am serious in making that point—and thus safeguarding our democracies. I believe that the threat of this recession is much more profound than any of the leaders of our democracies have been prepared to accept.

Mr. Tom Clarke: The hon. Member for Bath (Mr. Patten) made, in the circumstances, a most gracious and thoughtful speech. I thought during the Chancellor's speech—the right hon. and learned Gentleman paid more attention to the pipe which is used by the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) than to other matters—that he might have been more grateful for the contribution of the hon. Member for Bath in persuading not just the Chancellor himself but the Government and their supporters to take the view that the decision on the 5 per cent., which has led to at least two Divisions since I came to the House., was a mean-minded decision. It is one which I am sure we are all very grateful is being reversed. I therefore think that the hon. Member for Bath deserves the thanks of the House, if not of the Chancellor, for his contribution to that change of mind.
The Budget presented this afternoon seemed to me to be a very dull Budget presented in a very dull mariner. It offers very little hope to my constituents and will lead to great disappointment in Scotland, and indeed in many other parts of the United Kingdom. It cannot be divorced from the problems that we face as a nation—economic and


industrial problems and problems of the social fabric of our society, problems which the Chancellor and the Budget failed to address.
We are discussing this Budget at a time when unemployment stands in real terms at about 4 million. In my constituency over the last few days even more redundancies have been announced in the steel industry. At the Imperial plant in Airdrie and the Calder plant at Coatbridge—tube manufacturing plants which have a very proud record and which have provided tubes for oil and for the North sea—redundancies were announced by the British Steel Corporation even ahead of the decision of OPEC. Those of my constituents and their families who have had to face these decisions and deal with the realities of them will find very little, if any, comfort, in the measures that we have heard about this afternoon.
The Chancellor has addressed himself to a number of issues which have led to a great deal of debate, discussion and speculation not just in the press over the past few weeks but over the past four years. I believe that as a nation we were entitled to expect more from the Chancellor in view of the sacrifices that we as a nation have made since the 1979 election. This is a pathetic little mouse of a Budget which will lead to very little improvement in our economy and our industry or the rightful aspirations of our people.
That might have been forgiven if as a nation we were poorer in resources than we are, but this Budget has been presented by the Chancellor at a time when we have oil revenues, and other great resources which are being squandered in a way that not only is intolerable to our people but would, I believe, have been rejected by such people as Ian Macleod, who would not have been proud to present the kind of Budget that the House has heard today.
There is a need for the House to address itself to the prospects for real job creation. In my constituency more than 10,000 people are unemployed. Like my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen), I find that young people are disenchanted. There are simply no job opportunities available. What we expected to hear about in our debate last week on the Government's White Paper on public expenditure and in today's debate was measures which left open to local authorities, public agencies and others the prospect not just of improving services but of ensuring that more jobs became available. That simply has not happened.
The Chancellor referred to local government and to the Civil Service. I should like to refer to them too.
First, in recent months the Government have apparently taken the view that capital has been provided and that there is evidence of underspending in local government. This evidence, incidentally, does not apply to Scotland and it might be helpful if Ministers pointed that out from time to time. Even in England and Wales, however, it is not good enough for the Government, having criticised local authorities for three and a half years for alleged overspending, now to remind local authorities that capital is available, if only because the local authorities have to address themselves to the real problems which they face.
One of the problems is that local authorities, in drawing up their budgets for capital expenditure, have to bear in mind the revenue consequences of that commitment. If the rate support grant is not to reflect the real level of wages

Settlements, inflation and the rest the local authorities are not being helped by the Government's reminding them that capital is available without taking revenue into account.
We have continually heard in recent weeks references to the reductions in the Civil Service. It would be helpful if Ministers from time to time, acting as enlightened employers—although I agree that that would be an unusual role for this Government—would recognise that civil servants have made a remarkable contribution to that achievement. If there is a reduction to the extent that we have heard about this afternoon, the burden on the civil servants, particularly in Departments such as the DHSS and others dealing with the public and the increasing public demands, ought to be recognised. They are making a greater contribution to bringing about these reductions than any Minister has acknowledged. The Government should not go too far in that direction, and they should remember that morale in the Civil Service is not high.
The Government still owe an answer to the British people whom they promised reductions in taxes at the last general election. There was no substantial attempt to meet that commitment in today's Budget. VAT has still not been reduced to the level at which it stood when the Labour Government fell, and no account has been taken of the increased fuel charges that people now have to pay.
In my constituency, 80 per cent. of the electorate live in council houses. Although I welcome the very modest improvement for owner-occupiers, such measures offer no help or hope to people living in council houses. We need a sign that the Government appreciate the need to invigorate our industry, to give hope to manufacturing industry and to examine the imports that are being allowed almost to wreck the economies of some parts of the United Kingdom. The Budget provides no such sign and will be a great disappointment to many people, especially those in Scotland.
Finally, when the Prime Minister took office she quoted St. Francis of Assisi. I remind the right hon. Lady and her colleagues that St. Francis also said that we should seek not just to be understood but to understand. Nothing in the Budget suggests that the Government understand the enormous problems facing our country. I only hope that the many people, especially young people, who will be profoundly disappointed by the Budget will not cease in their campaign for a more responsible Government and a new society, which I believe can be offered only by the Labour Government that I believe will follow the general election.

Mr. John Stokes: I am sorry that the Leader of the Opposition could not remain, as he made some rather ungracious remarks about my right hon. and learned Friend the Chancellor. The right hon. Gentleman referred to Disraeli, Gladstone and Peel. He then went on to Italian history with references to Cavour and so on. In all modesty, I should inform the House that the comment on Peel was made by Disraeli himself. He said that Peel's smile was like not the silver plate but the brass plate on a coffin. That was at a time when the Tory party was undergoing similar convulsions to those now afflicting the Labour party.
I listened with great attention and interest to my hon. Friend the Member for Bath (Mr. Patten). If he does not address the House very frequently, he certainly regales us with regular articles in The Times. Incidentally, I note that


he criticised the editorship of The Times rather heavily. I do not always agree with what my hon. Friend says. Certainly, he must accept from me, as one whose constituency has probably twice as much unemployment as his, that I care every bit as much as he does about unemployment. I do not believe, however, as my hon. Friend appears to believe, that the Government can do a great deal about it. That is the difference between us.
My constituents—hardworking, honest decent, patriotic people who have never suffered hard times before—never complain to me. They do not blame me, the Prime Minister or the Government. They know that the troubles besetting us now are due partly to history, partly to the world slump and partly to the many mistakes made by management and unions in the past 30 years. To imagine that those problems can be solved by a Budget is absolutely puerile.

Mr. Chris Patten: Whatever my hon. Friend's constituents think about the recession and the slump, does he believe that the policies pursued by Governments in all the industrial democracies in the past few years have anything to do with the present level of demand in the world economy?

Mr. Stokes: My hon. Friend has anticipated my next comment. I agree entirely that more should be done on the international scene about all kinds of things.
What we want from the Budget is encouragement, hope and better morale. Morale is as important in peace as in war. I believe that my right hon. and learned Friend the Chancellor, despite his typically quiet tone, has given us both confidence and hope. Industry needs help to reduce its costs and my right hon. and learned Friend was right to concentrate on assisting our vital manufacturing base. Individuals, too, need help and hope, and the reductions in personal taxation will go some way towards that. My right hon. and learned Friend has presided over many Budgets. He has stuck to his principles and I believe that in time he will see his reward. The strict control of borrowing and spending has reduced inflation significantly. In time, that will have profound and beneficial effects on every aspect of commercial and industrial enterprise.
I welcome the cut in national insurance surcharge, although it is not great. I should have liked to see more help to reduce energy costs in industry. The burden of rates still bears very hard on industry, and some Labour-controlled councils seem not to realise the benefits that factories bring to their communities and the losses suffered if they are driven away.
Industry looks anxiously for a substantial reduction in interest rates. Today's 0·5 per cent. decrease is welcome, but, in view of the fall in inflation to 5 per cent., interest rates are still far too high and place too heavy a burden on the new and expanding industries so greatly needed in the midlands with its more traditional engineering and metal working base. Governments cannot do everything, of course, and I believe that the fall in the pound will now give exporters much that they need and expect to expand their overseas markets. I also believe that the fall in the price of oil will probably do more to increase production and the sale of products both here and elsewhere not just in the West but in the underdeveloped countries.
I am glad that my right hon. and learned Friend has not hit the motorists too hard as they always seem to have to

bear a heavy burden. I accept the changes in taxation on tobacco and wines and spirits, which are roughly as I had guessed.
I also welcome the increase in defence expenditure. I believe that the proportion of our taxes devoted to defence will be borne cheerfully by all but a sullen minority who are prepared to see us overrun by the Soviets.
Above all, I welcome the help given in pensions, child benefit, widows benefits and all the other increases in social security benefits.
I also welcome the help given to small firms and to small business men starting up their own firms, an operation that is already going well in the midlands.
Health Service charges impose a huge burden on the economy. If they can be re-cast to give better value for money, only the most prejudiced will object.
I wish that regional aids could be abolished. They have done nothing but harm to the west midlands. It would be far better to get the economy right as a whole, throughout the United Kingdom, than to try to tinker with regions. Nevertheless, I accept gratefully the help given to small engineering firms as we have so many in my Part of the world.
The increase in the house mortgage allowance is to be welcomed. I hope that it will help the housing market and the building industry.
My right hon. and learned Friend has rightly reduced personal taxation although I am sorry he was unable to reduce the standard rate of income tax. Even now taxation on lower incomes is too high; there is still not enough difference between those receiving social security benefits and those in work but in receipt of low earnings. There must be every incentive to work.
I welcome the raising of the investment income surcharge threshold. Every effort must be made to encourage savings which can be channelled into profitable investment. Investment by itself may be useless. It must be profitable and must be used properly.
The Chancellor is not an excitable man. He has not given us an exciting Budget, but he has given us a sound and sensible Budget such as we would expect from him. It will be well received not only in this country but throughout the world. As l said earlier, Governments can do only so much. As a historic Tory, I believe in original sin, as I am sure my colleagues do too. Therefore, efforts must be made by all of us. We cannot expect the Government to pull all of our chestnuts out of the fire. It is up to all of us to put the past behind us and to make the most of the opportunities that the Chancellor has given us.

Mr. Richard Page: I congratulate my right hon. and learned Friend on his Budget. Perhaps he needs to be congratulated not so much on his Budget today as on those of the four previous years, by which he has been able to create the basis for this Budget without the consequent and attendant inflation and growth of the public sector borrowing requirement that might have resulted some time ago.
I welcome very much the increase in the tax thresholds. It will put a little more money into people's pockets. I make a fervent appeal: when people have that extra money in their pockets, for God's sake let them make sure that they buy British goods if the quality is the same, because the purpose is to create jobs in this country rather than in manufacturing industry abroad.
I shall resist the temptation to range long and far over the Budget and confine my remarks to two specific sectors, the small business sector and North sea oil. I am delighted that the Government have confirmed their commitment to the small business sector. The measures proposed by my right hon. and learned Friend today mean that over 100 new measures have been introduced to help smaller businesses. Those are in addition to the changes that have taken place because of the movement on inflation.
In a previous Budget my right hon. Friend—if I may call him that—the Member for Down, South (Mr. Powell) said that the solution to this country's problem lay with the people. I echo that sentiment. In the past there has been a widespread belief that Government can solve all our problems and that individuals do not have to do anything. That is a view that is apparently still held by Opposition Members. Within the country there is a growing belief that the solution lies in our own hands if only we are prepared to grasp it. The Government have helped to remove some of the barriers and the people, especially through the small business sector, will bring about improvements.
Whenever I have spoken in the past about the small business sector I have ended up, like Oliver Twist, asking for more. I shall try not to do that now, because my right hon. and learned Friend has removed more from my list of wants and my begging bowl is getting smaller.
A major reason why our industrial competitors and other nations abroad help their small business sector is that it gives political stability to the economy. The smaller business sector gives a broader economic base. We have only to look at the strike record, or rather the non-strike record, of the small business sector to see the validity of that point.
I welcome the improvements to the loan guarantee scheme. I know from personal experience that this has helped businesses to get started and has contributed to the battle to win back business which has been sliding abroad. More and more small firms are moving into the export market. It is only by exporting and turning aside import penetration that we will create new jobs.
I am delighted to see the improvements proposed to the business start-up scheme. I have been a critic of the scheme for some time. I hope that confidence will once more be generated in the accountancy profession and that more and more people will be able and prepared to put their money into this imaginative scheme.
Time moves against me and I shall find it difficult to mention many parts of the Budget that I should have liked to mention. I must express appreciation of what is proposed about small firms corporation tax. I and colleagues in the small business sector have made continual representations about the inhibiting effect of the profits limits on development and growth. I am pleased that the rate of corporation tax for small companies is to be reduced from 40 to 38 per cent.
I also echo what was said by my hon. Friend the Member for Nelson and Colne (Mr. Lee) about the enterprise allowance being available throughout the whole country. No doubt more and more people will be prepared to take the plunge and start in business on their own.
On the North sea oil regime, in Committee on the Finance Bill for the last two years I and several of my hon. Friends have expressed our concern over the fact that the tax regime is having an inhibiting effect on the

development of small fields. Unless we can find new, large fields in the North sea we shall have to rely on the smaller fields to provide oil for self-sufficiency. Our previous tax regime held us back from developing. What my right hon. and learned Friend has proposed will be a valuable step forward in ensuring self-sufficiency and profitable oil fields for the future.
It is a good Budget. It has been quietly produced and presented. It is an imaginative Budget which will help many areas of the economy. It will provide a basis for growth without inflation, and for real jobs. I very much welcome it.

Mr. Peter Bottomley: If my right hon. and learned Friend the Chancellor had not announced an increase in the old-age pension and in child benefit I would have made a major speech criticising him strongly. I have been criticised on occasions for trying to do so much for the elderly and for people with children. It would be right on another occasion to develop what the Chancellor has said. I would welcome it much more if we could be assured that he will follow this year's good deal for the retired and for those bringing up children with similar proposals in future years. We have a responsibility to look after those who cannot look after themselves—those are the two main groups.
Next year, the effects of the Budget on the economy will be far less than the effect of the levels of pay settlements. I ask everyone who wants the Chancellor to generate more effective demand to realise that they have the opportunity to do that for themselves. If the average level of pay settlements in the next two or three years is consistent with low inflation, Chancellors will be able to gear the economy towards more effective demand. That will continue to be more competitive, more jobs will be generated and there will be more surplus for schools, health, personal social services and all the other good things that we ask for.
The Government have done well. Conservative Members who have argued for better old-age pensions, better child benefit and the restoration of the 5 per cent. abatement in unemployment benefit have done both the Government and the country a service. I am glad that we have been successful and that my right hon. and hon. Friends on the Front Bench have listened to our arguments. I hope that we have made them courteously and I am glad that they have been effective. If people want the country to prosper, I hope that they will listen to us more and more, that we remain the Conservative Government so that we can have a good impact on the country's government, and that we can discharge effectively our functions as politicians.

Mr. Austin Mitchell: Like all of the present Chancellor's Budgets, this one has come in with a whimper rather than a bang and, as usual, at the whim of a banker. Moreover, the Budget statement was delivered with all the wit, repartee and lightness of touch of a reading of Kelly's directory for 1928. It has come in with a whimper because it has been so well trailed. It is clear that the lobby was called in on Saturday morning and effectively told the Budget's contents so that we could read them all in Sunday's papers. That was the type of thing that Dalton had to resign for in 1947. It is now the normal


practice of the Government to hold back a few little goodies, which can be handed out at the last minute as a surprise gesture, once the public have been well prepared. That is now the technique of Budget preparation.
We have had a nice series from the Chancellor. In 1979, we had bludget when he bludgeoned the doubling of VAT out of the pockets of the people. Since then, we have had three budgets of fudge-it in which the Chancellor has moved furniture to distract attention from the depressing realities all around, and now we have been given grudge-it in which he has grudgingly given back some of the tax that he has been taking over the years.
It is an irrelevant Budget in which the Chancellor has turned a quick myopic gaze over the wreckage of industry that is strewn around the country and averted his eyes towards the election. This is a pre-election Budget from a Government who are so contemptuous of the people that they serve that they believe that they do not have to do much to win the election, but it is essentially an election offering.
The Budget is also irrelevant in terms of the promises that were held out in 1979. We were promised tax cuts, but taxes, even after this Budget, represent a bigger share of the average working man's earnings, and a bigger share of gross national product than before 1979. The Government promised to cut spending but have increased it. After this Budget, spending will be higher as a proportion of GNP than it was before 1979. The Government promised to make us competitive, yet they have crippled British industry's competitiveness.
Most important is the fact that the Budget is irrelevant to the real problem in Britain today—industrial decline on a scale that has never before been seen in Britain. The scale of our decline is unique in the advanced world, yet we were the world's first developed country. The decline has been precipitated by interest rates which remain high, even after the minimal 0·5 per cent. reduction that was announced today, because the Government are determined to keep them high to defend an over-valued pound. British industry must pay the price for the high exchange rate by being crippled by high interest rates. The depression has been engendered by the slump in demand and an overvalued pound. Despite its recent fall, the pound is still over-valued as compared with the currencies of our major EC competitors.
All of those policies, which are implicit in the monetarist approach, have led to the ruin of British industry. If we want a monument to the Chancellor's achievements, we have only to look around us at the state of British industry. Its condition will not be improved by today's Budget. Our depression is the worst of any advanced industrial country, our rate of unemployment is higher and our rate of production loss greater. Manufacturing production has fallen by about one fifth. One has to ask why that should be so when we have the best prospects as, for the first time, oil provides us with a chance to expand through the balance of payments problem which has bedevilled British industry and the economy since the second world war.
Oil not only makes us richer than most of our competitors, it gives us the opportunity to grow through depression and expand through the balance of payments

problems. However, oil revenue is being thrown away because the effects of the balance of payments are being used to finance a flood of imports and destroy British jobs. Moreover oil tax revenues are being used to support those who have been made unemployed by the balance of payments effect. The oil revenues have been thrown away because the Government are obsessed with the piggy bank economics that were discredited in the 1920s, which have been irrelevant since Keynes, but which are still the Government's dominant approach.
What has been created by the depression that has been worse here than in any other advanced country and out of which it will be difficult to break? Not industrial success and a springboard for growth, but a graveyard. Today, the Chancellor has painted up the gravestones but left us locked in the graveyard, and the Prime Minister's sermons drift lightly and ecclesiastically over the scene. The only way out of the graveyard is by a massive boost to the economy and demand, combined with an improvement in the competitiveness of the pound by reducing interest rates. If we are to increase demand, we have to stop it washing overseas. The change in the hire purchase regulations last year simply financed a flood of imports and thus washed overseas.
The opportunity for a boost has never been greater because the scale of depression has never been greater. Such a boost would improve the circumstances of the less well-off and stimulate the economy by pumping money into it and the pockets of the people, especially those who contribute most to consumer demand. We could even use that increase in demand to cushion the inflationary consequences of the expansion that must occur. For the Chancellor to argue, obsessed with piggy bank economics as he is, that the only boost to demand that we can afford is minimal because the inflationary consequences would otherwise be so great, merely demonstrates the irrelevance of his attitude.
Simply putting unemployed people back to work would save £5,000 on each such person as £5,000 represents the revenue that is lost from someone not working and the cost of supporting that person.
We can borrow more. The Government are borrowing less, as a proportion of GNP, than any other advanced industrial country. That is clear from the most recent issue of Lloyds Bank Review. It is clear that our scale of counter-cyclical spending is less than that of any other country. If the worst came to the worst, we could print money. That is effectively what the Americans are doing. They are expanding the money supply to stimulate the economy and bring down interest rates.
It would help if we did not have such a supine business community which has accepted depression and all that has gone with it. Greater love hath no man than that he lay down his firm for his prejudices. That has been the CBI's attitude. It has been prepared to sacrifice firms to support the ruinous policies that the Government have pursued.
The Budget is irrevelant because it is a wasted opportunity. That is a national tragedy because as industry declines our competitiveness and our ability to survive are ruined.
Debate adjourned.—[Mr. Garel-Jones.]
Debate to be resumed tomorrow.

British Railways Bill

Order for Second Reading read.

7 pm

Mr. Patrick McNair-Wilson: I beg to move, That the Bill be now read a Second time.
This is the twentieth miscellaneous provisions Bill of its kind since the reconstitution of British Rail in 1962. It comes at a time when the railway industry is very much in the public eye. It would be difficult for anyone in this debate not to be aware of the recent report into the general activities of British Rail. Although I shall be dealing with the specific points in the Bill, I should make it clear that the British Railways Board recognises the need for efficiency and for making the service as acceptable to its customers and passengers as possible. However, the board can boast a great achievement and a first-class record.
In the 1980 corporate plan it was decided that there should be a slimming down of the work force by about 38,300. About two thirds of the target has been achieved this year, and 24,000 employees have left the railways. The external finance limits that were established in 1982 will be the guidelines for the industry.
However, not everything is perfect and many areas must be improved. A disturbing factor in the future profitability of the railways is ticket evasion. The latest figures for ticket evasion in London and the south-east show that it costs British Rail about £12 million a year. There is a long way to go before we cure all the ills of the system.
This Bill sets out to continue the modernisation that has been part and parcel of previous legislation. It is a slow and relentless attempt by the board to make the system more competitive. That means, inevitably, that occasionally action is required that will provoke local controversy.
One of the most significant parts of the Bill is the decision to establish a rail link with Manchester Ringway airport. It takes into account the argument about the third London airport and of general airport policy. Other parts of the Bill deal with more mundane matters such as the closing of level crossings and footways, the extension of facilities and the improvement of some facilities to make them more efficient. If I am fortunate enough to catch your eye, Mr. Deputy Speaker, and with the permission of the House, I shall deal with those matters in more detail later in the debate.
Clause 3 deals with the incorporation of the general Act and is a standard clause in such Bills. Clause 4 relates to the Compulsory Purchase Act 1965 and is again a standard clause in such Bills. Clause 5 is the first area of contention. It gives power to undertake certain works, the first three of which relate to the construction of the new railway to connect Manchester international airport at Ringway with the Manchester to Wilmslow line via Styal. That work is part and parcel of the airport authority's general plan from 1985 to 1990. It will have far-reaching consequences, because for the first time it will provide access to the airport for rail passengers from many parts of the north of England and from as far away as the east coast. If the Stansted airport expansion ever takes place, or if it is delayed, all those factors will affect the decision. However, there can be no doubt that the airport at Manchester is now of international significance and it is right that such a proposal should go ahead as quickly as possible. I hope that the House will approve the proposal.
The fourth work relates to the constituency of the hon. Member for Stockport, North (Mr. Bennett) and to his constituents in the Woodmoor residents association. It deals with the construction of a short length of railway at Hazel Grove to enable a through weekday passenger service to be introduced between Liverpool and Sheffield. As someone with business interests in Sheffield, I know how badly needed that link is. The link will enable passengers to travel that journey without changing. The board is prepared to admit the problems currently faced by passengers in Manchester who have long walks between trains. This construction will solve the problem and will enable the Liverpool, Warrington, Manchester and the Manchester, Sheffield and east coast railways to be combined in a single service through Stockport. That will mean a direct service from Stockport to the Mersey, across the Pennines, to Scotland, the east coast and Europe.
That short line will have a significant effect on the economic and industrial infrastructure of the area. However, I recognise that it will be necessary to acquire a small portion of land which is not owned by the British Railways Board, and which adjoins Norbury churchyard. Discussions have taken place and every possible provision has been made to ensure that there is no interference with graves or memorials in the churchyard.
Clause 6 deals with the infilling of a disused canal in Leeds. I mention it only because it is an example of how a comparatively small amount of work can be used to get round the problem of maintenance that is currently besetting this piece of line, where the bridge can be supported in a different way and money saved as a result.
Clauses 7 to 18 deal with the closures and extensions to which I referred earlier. As I said, I shall be happy to deal with hon. Members' specific points later. Clauses 19 to 27 deal with land acquisitions and related provisions. Clause 19, with which schedule 4 should be read, relates to a section of line that is liable to flooding in heavy rain. My hon. Friend the Member for Derbyshire, South-East (Mr. Rost) is concerned with this matter. In the Draycott area of the Derby to Trent railway there is a dip in the track which tends to flood. The board proposes to remove the dip in the track and to construct a new drainage system. I recognise that the constituents of my hon. Friend the Member for Derbyshire, South-East and especially Erewash borough council and the Breaston parish council are concerned that any plans to do that may be detrimental to other flood prevention plans. I assure my hon. Friend that the board's intention is to work out with the local authorities and others a scheme that will not interfere with flood prevention in any way.
The board is determined to cure this serious problem affecting the railway system. I trust that it will be possible to work out a comprehensive scheme for flood prevention in the area, and that my hon. Friend and the two local authorities to which I have referred will accept the board's proposals.
Clause 28 in part V of the Bill deals with the problems faced by my hon. Friend the Member for Portsmouth, North (Mr. Griffiths). Sealink UK Limited, which is a subsidiary of the British Railways Board, has a plan to overcome the serious problem that affects the Portsmouth area. The new powers sought in clause 28 are that Sealink should be able to levy charges on the users of the floating landing stage and pontoon in Portsmouth harbour beside the railway station. The British Railways Act 1963 enabled the Portsmouth Harbour Ferry Company Limited


to have a 20-year lease of the use of the pontoon and landing stage. That lease expires in July. The history goes further back than that.
British Rail and its subsidiary, Sealink, are involved in this problem because of the Joint Portsmouth Railway Extension Act 1873. The Portsmouth Harbour Ferry Company operates ferries from the landing stage to Gosport, which enables passengers to travel a short distance by ferry, whereas if they went by road they would face a journey of between 15 and 18 miles. The 20-year lease allowed the company to use the facility for an annual payment of £1,500. While it is true that the company has occasionally given ex gratia payments to meet the rising costs of maintenance and repair, the moneys that have been forthcoming cover a fraction of the true costs of keeping the facility operational.
The facility, which is used by others as well as the ferry, is regarded as an important local amenity. If it is not properly maintained and repaired, it will be endangered. Since there has always been a common hard near to the facility, the clause seeks to allow Sealink UK Limited to raise charges upon those who use the facility and to regulate its use. Many people would be happy for the position to go quietly rumbling on and to make no change at all. Were that to happen, the facility would become another burden for the British Railways Board to carry. That would be the worst possible solution in the long term. The facility, which came into being in the second half of the 19th century for special reasons, must be seen in the true light of the present position.
Hampshire county council has spent considerable sums of money on the Gosport part of the Portsmouth—Gosport journey. Those in the area recognise that money must be spent.

Mr. Peter Viggers: Is my hon. Friend aware that there have been discussions among Hampshire county council, Portsmouth city council, Gosport borough council and the Portsmouth Harbour Ferry Company, and does he join with me in hoping that those talks lead to a compromise solution which is acceptable to all parties locally? If the proposals in this clause were to be continued, and if they were put to the House, the clause and the Bill would meet opposition.

Mr. McNair-Wilson: I am grateful to my hon. Friend for that statement. He reflects my anxiety and that of other groups.
An agreed solution is required. If any charges are made, they must be reasonable. No firm figure has been agreed. Several figures have been suggested, one of which was 5p per person. It is important to recognise that if nothing is done the facility will eventually vanish because it will not be properly maintained. It is in the interest not just of the ferry company but of those who use the facility to ensure that it is put on a proper commercial footing.

Mr. Albert Booth: If the intention of the promoters is for an agreed solution to be found to the problem, why is the Bill proposed in terms that would give Sealink the power to charge any fee that it thought fit? That is hardly commensurate with the promoters wishing to have an agreed solution.

Mr. McNair-Wilson: The right hon. Gentleman knows that no figures appear in the Bill. The intention of the clause is to arrive at an acceptable figure. Local

criticism—my constituency is not a million miles away—is that the charges to be levelled must not be grossly extortionate. The problem is to raise sufficient funds to keep the facility operational. I assure the right hon. Gentleman that he will not find any money figures in the Bill. The proposal will allow Sealink to levy charges for the use of the facility in keeping with the cost of maintenance that must be faced in this day and age rather than when the initial concession was given in 1963. If other hon. Members wish to raise this matter, I shall try to provide further assurances.
Clauses 29 to 32 are the miscellaneous provisions.
The Bill marks another milestone on the road to clearing up some of the problems that inevitably face a railway industry with such a long history. I trust that the House will give the Bill a Second Reading because the matters to which I have referred require urgent attention. If the British Railways Board is given these miscellaneous provisions, I am convinced that several problems can be dealt with. However, I give no assurance that it will not be necessary in future to bring further matters before the House.

Mr. Andrew F. Bennett: I had rather mixed feelings when I put my name to the blocking motion, because although it seems that some measures in the Bill will be very worth while for my constituents and the country as a whole, there are items that are of concern to them. Through the hon. Member for New Forest (Mr. McNair-Wilson) I hope that we shall be able to elicit an assurance from the British Railways Board that the problems will be dealt with sympathetically. I also hope that we can elicit from the Minister an assurance that the Goverment will give assistance in the areas for which they have some financial responsibility.
I very much welcome the proposals for the rail link into Manchester airport. Manchester airport is an excellent example of municipal enterprise, first by the old city of Manchester, and more recently by Greater Manchester council. In building up the airport over the years they have shown the same foresight as their forefathers demonstrated in building the Manchester ship canal, and just as that brought prosperity to Manchester at the turn of the century, so Manchester international airport has brought great prosperity to the Greater Manchester area and to the northwest in general. It is perhaps a little sad that in the 1950s agreement could not be reached on Manchester and Liverpool going for one airport between the two cities, instead of having independent developments. However, it is now clear that Manchester international airport serves the area extremely well and has brought many jobs into it.
The airport serves not only Greater Manchester but the rest of the north-west and is the nearest major airport for most of north Wales, much of Cumbria and, increasingly, Yorkshire and even Humberside. Many of those who use the airport come from the Sheffield and Leeds areas. Indeed, the region that it serves stretches well down into the midlands. Therefore, the airport serves a large part of the United Kingdom and is very effective. In addition to serving a large catchment area, it runs direct flights to many European destinations as well as some to the United States of America and Canada. To those hon. Members who live in the Greater Manchester area it offers quite an attractive alternative means of getting to the House. Sometines I can get from my house in Stockport to the


House of Commons in two hours. Admittedly that involves the shuttle flying promptly on time. Nevertheless, the service is very good.
The airport is now well served by road, and particularly by the M56, the M63 and the M61. The airport is much more convenient than many people think, even if one wants to use the railway in conjunction with a short bus ride. Getting to Manchester airport compares extremely favourably with the difficulties faced by those leaving London for Gatwick or Heathrow, even with the existing system using buses or taxis from the railway station. Any rail link to the proposed third London airport at Stansted would be far less convenient than a link to the Manchester airport. Therefore, Manchester has already established itself as a proven international airport with good communications.
Clearly, the airport would be enhanced by a direct rail link into it. I very much welcome the proposals in the Bill to put a loop off the Wilmslow to Manchester via Levenshulme railway line into or, very close to the airport's terminal buildings. The piece of railway is very short, and in some ways that shows how modest are the proposals for Manchester. One could have envisaged a much more elaborate scheme that would have involved linking that railway line to the old Cheshire railway at Ashley, which would have provided a loop into Manchester and made it much easier to have longer connections into Manchester airport. However, the proposals — modest though they are—will make it possible to have direct links from Wilmslow and from the centre of Manchester to the airport, and will link the airport with the rest of the Manchester rail network and with the rest of the rail network. Therefore, I welcome that proposal.
As the proposal is so modest, we should have an assurance from the Government that they will ensure that British Rail has the money to build that railway. It would offer good job opportunities to those in the construction industry and provide quite a bit of extra work for British Steel and others, because of the materials involved in its construction. If the Government want to show the people of Greater Manchester that they care about creating jobs, they could invest the money in this small and modest project and be sure of obtaining a very good return on it. The Government should think at least of doing that before giving any consideration to a further terminal at Heathrow or any commitment to anything at Stansted. Manchester is potentially London's third airport. Once the rail link is established, many people living on the north side of London, let alone in the midlands, will be able to get to Manchester airport more easily than to Heathrow or Stansted.
The Minister's interests lie with Birmingham, but I would also argue that in many ways the Manchester airport link would provide a good service for Birmingham. If a good rail link is provided to Manchester airport, there will be great scope for ensuring that its work is integrated with the work at Birmingham and Liverpool, Speke airports. In that way it will be demonstrated that one can reach the many centres of Europe from provincial Britain without having to go through London. The way in which transport planning often assumes that people must go in and out of London gives rise to great resentment. Those in the know about Manchester airport realise that one can fly from

Manchester to European destinations and get connections to many parts of the world. Therefore, I hope that the Minister will make it clear that he supports the link proposed and that he will put up the money for it.
In the Budget statement we heard briefly that the Government were considering free ports. I have some reservations about the idea of free ports, but if there are to be any, Manchester international airport must put forward a strong claim to be considered. Free ports involve bringing in commodities, adding considerable value to them and then sending them out again, and clearly there are skills available in the Greater Manchester area and very close to the airport which would make Manchester a good
The rail link will be important not only for passengers but for freight. A large amount of freight now passes through Manchester airport and I should like more to go by rail than by road. On the whole the freight still goes out on passenger planes and therefore it is important to consider those two groups together. I hope that the line can be used for freight and that when part loads go out with passenger traffic there will be increasing encouragement of the freight handling that goes with it. I hope that the Minister will give us that assurance.
Much of the track involved in the Bill will be run over by the sleeper trains. Last week a useful Adjournment debate was instigated by the hon. Member for Liverpool, Wavertree (Mr. Steen). A few of us had an opportunity to tell British Rail that it must reconsider its proposal to withdraw the sleeper service to Manchester. It would have been perfectly legitimate for hon. Members to have obstructed this Bill in order to persuade British Rail to be a little more responsive about the whole question of the sleeper service. British Rail's solicitor and its parliamentary agents have been extremely helpful about the Bill, but its attitude to Members of Parliament over the withdrawal of the sleeper service has been disgraceful.
It has been difficult for hon. Members to have discussions with British Rail, and it has dragged its feet. I hope that the Minister can give us a progress report on the negotiations. There is little point in British Rail proudly saying that as a result of these proposals it will be able to run freight from Kings Cross through Sheffield, through the Pennines and into Stockport and Manchester and up into Scotland, if at the same time it is talking about removing basic services such as the sleepers.
I appreciate that British Rail does not have the money to put into new sleeper rolling stock on those lines, but there is a strong argument for refurbishing the old stock that has been withdrawn from the London to Scotland route and London to the west country route and to keep going the sleeper service to the north-west, Yorkshire and other areas. In particular, British Rail should have taken a little more trouble at least to consult hon. Members who use the service frequently, and other interest in the area, about its proposals, rather than, as appears to be the case, withdraw the sleeper service by stealth.
What is more, it is the fault of British Rail that the number using this service has declined. Three years ago, following a fire and asbestos problems, it reduced the Manchester service from two carriages to one carriage. One attendant had looked after two carriages. He then had to look after only one carriage, so this reduced his efficiency. Furthermore, fewer berths were available. Many hon. Members and other users of the sleeper service found that they could not regularly get the bookings that they wanted and started looking for alternative services.
I am aware that many hon. Members started flying between destinations at that point because of the decline in the sleeper service. Therefore, I hope that the Minister will be able to tell us that British Rail will be more responsive. If British Rail is not more responsive on the sleeper service, it may be tempting one or two of us to return to the Bill at a later stage and press BR to take a little more notice.

Mr. Peter Snape: Is not the railway management carrying out its usual practice in these matters, in that when it wishes to withdraw a service or close a railway line it makes the service as unattractive as possible to its essential customers, drives them away to using some other form of transport and then produces figures to illustrate that the service is losing a great deal of money and must be closed?

Mr. Bennett: I did not wish to delay the House for too long tonight by talking about the sleeper service in detail, but in many ways that is what the management did with the service. People had to get on the train half an hour later and get off half an hour earlier. The management did little petty things that made the service a little less attractive.
The line and works at Hazel Grove are referred to in the Bill. Here British Rail has not been as sensitive as it might have been. A group of people in Woodsmoor—not, as the hon. Member for New Forest said, my constituents, but within the Stockport area—have been aggrieved for a long time about the bridge over the railway line. Without any consultation, British Rail suddenly closed the level crossing and stuck a footbridge across which was clearly a monstrosity. That resulted in many people being attacked when walking over the bridge because of the way that it was constructed, and that caused many local problems.
For a long time British Rail treated the issue with little concern for public opinion. It has now, as a result of a court action, had to settle with Greater Manchester council that it accepts that the level crossing should have been kept open and that something had to be done about the bridge. The Woodsmoor residents put in a petition against the Bill but, sadly, as they were not conversant with parliamentary private Bill procedure, they got the petition in a little late.
Rather than the promoters at least hearing the petition, they objected to the vires of the petition because it was late. The Woodsmoor residents decided to withdraw the petition and return to it when the Bill goes before the House of Lords. The promoters would have done better to let those people have their voice heard at this stage and to see how far they could meet the objection. I hope that the promoters will make it clear that they will deal with the matter of the level crossing, that it will be restored and that the bridge will be taken down. In that way, that concern of the Woodsmoor residents will be dealt with before their petition has to be heard in the House of Lords.
I welcome the works at the Hazel Grove. I realise that there are one or two people who will say that that will make extra noise on the line. However, I have little sympathy with that argument, because the line used to carry old coal trucks and limestone trucks without automatic braking systems. Often, when those trains stopped, the clanking could be heard all over Stockport. Any increase in traffic now will not go back to the noise volumes that existed on British Rail until fairly recently. Therefore, I welcome the proposals for the link at Hazel Grove.
The link will mean that it will be possible for the trains to run, as the promoters say, from Sheffield, through Stockport, into Manchester Piccadilly, and out to Liverpool. It will give a through service, with a considerable increase in convenience for individuals, as it will save them trailing across Manchester.
I have one query about the amount of traffic that will go through the junction at Knott Mill and Deansgate. That is a fairly tight piece of railway line and I am a little concerned about whether it will be able to cope with the amount of traffic. We are also talking about traffic going from Sheffield up to Scotland along that line, using the new Windsor link, which came in a previous miscellaneous provisions Act. There are questions about whether there will be sufficient capacity to take the number of trains that the promoters have been suggesting will go through.
This piece of line will have one other effect. It will give us a first-class route from Sheffield to Stockport, through to Manchester and Liverpool, and will link up with the other line going to the airport. It will also mean that main line trains will be withdrawn from the section of railway line that comes up from Strines, Marple Bridge, Romily, Bredbury, Brinnington Reddish, Gorton and into Manchester. That makes sense for the main line trains, which will come through that bit quicker, and there will be a better service. However, one has to ask what implications it has for the piece of line that will lose its main line trains and will also probably lose a great deal of freight.
I fear, as do many other people, that once those through main line trains are taken off that line, and once the goods are taken off, British Rail will tell Greater Manchester transport executive that the line has now to be paid for by local commuter trains. That has considerable implications, because it will mean either that the fares must go up on that line, or that the Greater Manchester council will have to pay an extra subsidy. As I understand the Transport Bill that is going through the other place, there will be considerable problems for Greater Manchester transport executive if it wants to spend extra money on subisidising that line.
I do not wish to go back over the arguments on the Transport Bill. It is clear that the Opposition have a different view from that held by the Government, but I hope that the Minister will give us assurances that if Greater Manchester transport executive has to put in an extra subsidy to cover this line, that will be given special consideration in working out the grants for the Greater Manchester transport executive. It is already pressed up against the wall by the Government's legislation, and must not now find that it has to take on extra responsibilities for the line and does not have any leeway. I wrote to the Minister on this subject last week, and I hope that he will be able to say whether it will be possible for Greater Manchester transport executive to get extra Government assistance to cover the costs of this line.
I hope that the Minister and British Rail will give a categoric assurance that there will not be a dramatic increase in fares for people using those stations. If, however, there is such an increase, I hope that there will not be talk of closing the line because fewer people are using the service. I trust that allowing British Rail to put in about 100 yards of new track at Hazel Grove will not result in its removing an important and valuable commuter service to Manchester.
If British Rail is looking for savings on the line at that point, it should look for them, not on the commuter services, but on the lines from Hazel Grove into the Mersey valley and Cheadle Heath. If the link is put in, British Rail will have two lines running parallel to each other. British Rail took out a small section of track at the Bridge Hall estate. It has told me that it has considered putting back that piece of track but that it would be expensive because of one of the bridges involved. That bridge is a traffic hazard and will have to be reconstructed for road traffic reasons. If the track beside the Bridge Hall estate from Hazel Grove to the Stockport line towards Cheadle Heath is reconstructed, four or five miles of track which carries freight only could be removed, which would have considerable advantages.
I hope that the Minister will assure us not just that British Rail will have the power to instal a link to Manchester airport but that the Government will give it the resources to do it quickly. It will do a great deal to assist jobs and to help the north-west to achieve considerable economic success.
I welcome the Hazel Grove line, but will the Minister make it clear that the Greater Manchester transport executive will have the money to ensure that the old line used by the main line trains will not be put at a disadvantage or suffer any closures? I welcome the opportunity to raise these issues. I hope that we shall have the assurances for which we have asked so that the Bill can make speedy progress through the House.

Mr. Peter Rost: I welcome the assurances given by my hon. Friend the Member for New Forest (Mr. McNair-Wilson) who has so ably moved the Second Reading. I hope that British Rail will find satisfactory agreed solutions to the objections from my constituents.
I understand that there is plenty of good will. British Rail and its parliamentary agents have given every sign in correspondence that they wish to meet the objections. The objections have not yet been made, which puts me in a slight difficulty about supporting the Bill at this stage. I refer particularly to clause 3 which deals with the acquisition of land.
A large part of my constituency is subject to flooding. The river Derwent flows through the area that we are discussing where British Rail wishes to acquire land. The Derwent of course runs into the Trent. The residential areas of Draycott, Breaston and Borrowash and other parts of the constituency have a long history of flooding. The three parishes, Draycott, Borrowash and Breaston, which are most worried about the Bill's proposals, are supported by Erewash borough council particularly in regard to clauses 19 and 20.
Although Erewash borough council has a most competent technical services team headed by Stanley Martin, who I have no doubt will reach a sensible solution to the problem with British Rail, there has been a fair amount of difficulty because the legislation was rather thrown at the parishes without proper consultation. It has added to the problems that must now be resolved.
The railway line runs either through or on the edge of the built-up areas where there has been considerable flooding in the past. There is now at long last a more

advanced flood alleviation scheme under way. I should like to detail the problem as seen by people in this part of Derbyshire. British Rail is rightly worried about the regularity with which its tracks get flooded, which is why it proposes to alleviate the problem. British Rail's proposals allow for increasing the capacity of the track-side drainage culverts to accommodate all the flood water and discharging the culverts into a small water course to the south of the A6005, the Draycott road, adjacent to the site of the old Draycott railway station.
I know the area intimately and one of the reasons why the local residents are a little up in arms about the proposals is that British Rail closed the railway stations some years ago and the residents do not even have the benefit of the use of the railway.
The water course flows in a generally south-easterly direction eventually forming the water course on Sawley lane, Draycott at Wilne Cross. It is important to understand how the railway track becomes flooded. A number of water courses flow in a southerly direction draining the higher land of Risley to the north and discharging into the river Derwent to the south. At times of heavy rainfall—we have plenty of that in this part of Derbyshire—the water courses become fully charged and in extreme conditions overflow into the adjacent fields and eventually—because the land generally falls north to south—the flood water finds its way on to the railway track which lies in a cutting. As the present track-side drainage is incapable of accepting all this flood water, the track remains flooded for a considerable period of time. It is a problem which British Rail wants to remedy.
The discharge to the water course is acceptable and controlled at the moment. However, if British Rail's current proposals go ahead, although the quantity of flood water would remain the same, its rate of discharge would increase substantially causing unacceptable flooding downstream of the discharge point at the old Draycott station. Much of this flooding could affect housing. British Rail proposes to transfer the flood water from four catchment areas and discharge it into a completely different catchment area which is highly likely to exacerbate flooding in the Sawley lane area of Draycott.
The Erewash technical services department has worked hard since it heard of the proposals on preparing an alternative solution. It has now finalised the alternative solutions which it believes will be technically feasible and which would cure the problem of flooding. In other words, the flow of floodwater can be controlled so that it does not flood the railway track. Indeed, the local authority maintains that the scheme that it has prepared would be more economical than British Rail's proposals. The problem that faces me is that the meeting between British Rail and my local authority, when these new proposals will be put to British Rail in detail, is not scheduled until next month. We do not really know whether British Rail will find them acceptable. Nor do we know how these proposals will be financed and to what extent British Rail will be prepared to meet its share of what is, after all, an overall flood prevention scheme. The local parish councils are anxious that the Bill should not proceed until there are firm assurances that an amicable solution has been reached.
A further problem concerns my constituents. It relates to clause 21 giving British Rail temporary access over adjoining property in seven places to enable it to move plant and equipment to and from the working site while the


flood prevention scheme goes ahead. Of course British Rail needs to have access to carry out the work, but there is much concern over the method that may be used to transport soil from the site and that this will be detrimental to the local environment. There is enough heavy traffic already in the area. We are talking about built up areas that have perhaps inadequate residential roads for carrying a great volume of traffic transporting heavy soil over a long period. I hope that my hon. Friend will be able to say more about this aspect.
I do not wish to object to the Bill in principle. I relate my comments specifically to the clauses dealing with the acquisition of land and the part of Derbyshire I represent where British Rail intends to alleviate flooding. Alternative proposals are prepared and will be discussed with British Rail. Until that happens, however, there is far too much uncertainty about the future for me to say that I can feel happy about seeing the Bill receive a Second Reading. No doubt my hon. Friend will be able to give further assurances. The problem that really concerns my constituents is how, if British Rail is given leave to proceed with the Bill and the unspecific clauses which allow it to purchase land, they will be able to oppose the proposals should British Rail find that it cannot meet the objections. This is the difficulty. That is why I have sought to put these points while feeling confident that a sensible compromise solution will be found. I hope that such a solution can be reached long before the Bill proceeds through Committee and back to the House.

Mr. Albert Booth: The hon. Member for New Forest (Mr. McNair-Wilson) referred to continuing substantial reductions in British Rail staffing and the contribution that the Bill will make to modernisation of the railways. The hon. Gentleman certainly tempts hon. Members to comment on the small effects of the Bill on the vast areas of British Rail that are in danger of collapse and the thousands of miles of the network that may have to be taken out of service as a result of shortage of investment. However, it is not my purpose to go further into those matters. I wish to stay fairly strictly within the terms of the Bill.
I am grateful to the hon. Member for New Forest for expanding on the statement by the promoters and giving hon. Members more information about the purposes of the Bill. There is a desperate paucity of explanation in the statement by the promoters about the purposes of the Bill, from clause 7 to clause 31. I am concerned about the badly and loosely drafted clause 13(2). This criticism applies to many parts of the Bill. Clause 13(2) provides:
Notwithstanding the provisions of the specified enactments
a number of gates at level crossings may be closed between certain hours. One turns in vain to the Bill to see which enactments are repealed for this purpose. They are not shown. Page 3 of the Bill states that
'the specified enactments' means the Act of 1839, section 9 of the Act of 1842, section 47 of the Act of 1845, sections 5, 6 and 7 of the Act of 1863".
Those who care to carry out historic research of our statutory records will no doubt be able to relate the provisions of clause 13(2) to those Acts. It is not, however, a good way of dealing with legislation.
Clause 14(4) proposes that British Rail should have the right to close certain crossings as public rights of way and, in fact, to prevent the passage of vehicles across them

while leaving landowners effectively with rights of passage across those crossings. This seems to me to beg the question how the clause will assist the modernisation of British Rail. One can understand that in certain circumstances a saving might be made by closing a crossing to everyone for vehicular passage. I cannot, however, understand—it is not explained by the promoters—how one can save money by leaving a passage open to landowners on one side but denying vehicular access to the public. It seems a strange way of limiting public rights.
A more serious limitation of existing statutes is to be found in clause 22. The clause contains a limitation of the rights that this House legislated in the Compulsory Purchase Act 1965. The clause appears to place a limitation on the rights that this House legislated in section 8(1) of the 1965 Act. That was an important right. Section 8(1) provides:
No person shall be required to sell a part only—

(a) of any house, building or manufactory, or
(b) of a park or garden belonging to a house, if he is willing and able to sell the whole of the house, building, manufactory, park or garden, unless the Lands Tribunal determines that—

(i) in the case of a house, building or manufactory the part proposed to be acquired can be taken without material detriment to the house, building or manufactory, or
(ii) in the case of a park or garden, the part proposed to be acquired can be taken without seriously affecting the amenity or convenience of the house."

The Compulsory Purchase Act goes on to lay down a way of determining the compensation that will be due.
This House, in legislating to ensure that if persons are subject to compulsory purchase they will have the right to say whether they want the whole of their property or garden purchased, as opposed to part of it, took an important decision. I shall not enter into an argument about the merits of the decision. I am prepared to accept that I and other hon. Members at that time took a good and valid decision. My argument now is that that decision should not be set aside for the purposes of this Bill. This is not the first time that a British Railways Bill has sought to limit or interfere with basic rights of compensation in acquiring land or premise's. So, in my opinion, this part of the Bill needs considerable justification.
In clauses 23 and 24 there is an interesting juxtaposition of compulsory purchase rights. In clause 23, we are asked to agree that the board should have a right of compulsory purchase over certain lands affected by the Bill, provided that it purchases it before 31 December 1988. That is not an unreasonable proposition. One would not want that right to be used at any time in the future. Clearly it is only fair that the present occupiers of the land should know, at least within a limited period, whether the board will exercise its statutory right to buy them out. I accept that between now and 1988 is not an undue restriction on the British Railways Board. It should be able to determine whether it will exercise a compulsory purchase right by that date.
However, in clause 24 we are asked to extend a previous right of compulsory purchase laid down on exactly the same basis, and to extend a right that the House gave British Rail to carry out the purchase by 1983 up to the year 1988. What assurance is there that if we pass the Bill, with clause 23, in 1986 or 1987 we shall not have another clause such as clause 24 in a British Railways Bill


asking us to extend clause 23 further? Again, this is an attempt to confer on the promoters a right which the House has been reluctant to grant, in the light of much experience of dealing with compulsory purchase powers arising from planning consent provisions, in the interests of a fair balance between the wider public interests and those of individual owners of property.
In clause 28 a wide and sweeping power is sought. I am glad to see in his place the Chairman of the Select Committee on Statutory Instruments, my hon. Friend the Member for Keighley (Mr. Cryer). He will appreciate how sweeping the power is. The clause says:
Notwithstanding anything in any enactment, the company may"—
the clause then says what the company may do, ending with the words:
as the company may think fit".
The company may make the regulations, terms and conditions, and determine when it will
demand, take and recover or, as the case may be, waive such charges
in the operation of a landing stage. Frankly, that is not the language of a promoter who is seeking to reach a fair and balanced solution to an admitted problem. The days are past when it was possible to enshrine in legislation charges, tolls, and so on. Inflation overtakes such provisions. There was a time when the House could say in confidence that a penny toll for taking a pig or a twopenny toll for taking a cow or horse across a river was good legislation. That time is past.
However, we need to find a way to resolve this problem, and it is not to give those, be they private or public, who have a monopoly right over forms of transport an unqualified power to determine the conditions in which it shall be used. One can say that about Sealink, knowing full well that the Government have taken powers to require the British Railways Board to sell Sealink, so that after many years as a publicly owned operation it might be a private operation. What I am saying does not relate to the question whether it should be private or public. I am arguing that clause 28 is not the way to resolve the problem. In the event of a dispute about proper charges to maintain a transport facility, we need arbitration or some method to determine those charges.
Although I am conscious that British Rail is beset with many problems, and although I do not share the confidence of the hon. Member for New Forest that it can operate happily within its external financing limits over the next year, I welcome the minor provisions in the Bill which allow British Railways to extend small parts of its network. Let us hope that the two and a quarter miles to Ringway are but the start of many more great and valuable extensions of the British Rail network.

The Under-Secretary of State for Transport (Mr. Reginald Eyre): It may be helpful if at this point I intervene to give a brief indication of the Government's view on the Bill.
The Government have considered the content of the Bill and have no objection to the powers sought by the British Railways Board. However, I should point out that my right hon. Friend the Minister of Agriculture, Fisheries and Food, for reasons connected with the use of agricultural land, has reservations about the need to take powers in

clause 5 at the present time for the construction of a rail spur to Manchester airport, when plans for the airport have yet to be finalised.
I understand that the promoters of the Bill are aware of this reservation and will discuss it with the Ministry in the near future. I hope that in that way it will be possible to iron out any difficulties.
The hon. Member for Stockport, North (Mr. Bennett), who referred particularly to the successful development at Manchester airport—I noted all that he said—raised three preliminary points and then came to his main point. I shall take them in that order. The hon. Gentleman first asked about Government support of the proposed rail link to the airport. I am sure that he understands the procedure that applies in railway development of this kind. It is up to British Rail to come forward in due course with its proposals, which the Government will then consider.
The hon. Gentleman's next point concerned British Rail and freight use. I appreciate the practical element in what he said, and I am sure that it will be considered.
The hon. Gentleman then referred to a subject that was dealt with in an interesting Adjournment debate last week—the sleeper service to the north-west. The hon. Gentleman will understand that I cannot add to the speech that I made on that occasion, but I remember vividly his contribution.
The hon. Gentleman has written to my right hon. Friend the Secretary of State for Transport on behalf of the Greater Manchester passenger transport executive about the effect of the board's proposals for the Hazel Grove connecting line and the entitlement to transport supplementary grant. The hon. Gentleman referred to that matter again this evening. I understand that the board is examining with the passenger transport executive the effect of diverting services from Sheffield via Hazel Grove. We shall have to await the results of that examination, but I can say that if, as a result of diverting some traffic away from the existing route, the passenger transport executive were left bearing the costs of the line, that would be taken into account in setting the level of revenue support for the transport supplementary grant in the appropriate year.
The right hon. Member for Barrow-in-Furness (Mr. Booth) made a short speech. I always find his speeches on transport matters of great interest because of his great enthusiasm for detail. His points will be answered by my hon. Friend the Member for New Forest (Mr. McNair-Wilson) on behalf of the promoters, as will the points raised by my hon. Friend the Member for Derbyshire, South-East (Mr. Rost). I must remind the hon. Member for Barrow-in-Furness of the relevant parts of the Serpell report which do not support his remark that thousands of miles are likely to collapse.

Mr. Booth: There is no need to look at the Serpell report. One has only to look at the rail policy document that was signed by every member of the British Railways Board. That said that if investment was not increased above the 1981 level, within a decade thousands of miles of track would have to be closed down. Investment has not risen above the level; it has fallen.

Mr. Eyre: The right hon. Gentleman was implying that there was an imminent state of collapse. I must remind him that the Serpell report conceded the areas in which there are problems. The right hon. Gentleman and I both know


that there are maintenance problems. We have developed the wise policy of earmarking part of the PSO grant to carry out such work. I believe that the right hon. Gentleman agrees with that policy. We are continuing it on a more extended basis during the current year, therefore assisting British Rail to deal with the problem.
I recommend to the House that the Bill be given a Second Reading and be allowed to proceed in the usual way to Committee where its provisions can be considered in detail.

Mr. Frank R. White: I rise briefly to support my hon. Friend the Member for Stockport, North (Mr. Bennett), particularly in his reference to clause 5 and the provisions relating to the developments at Manchester airport. A few years ago it would have seemed very strange that an hon. Member who represents Bury and who lives in Bolton should be extolling anything to do with Manchester. Although we live in the same part of the country, the insular nature of northern towns puts Manchester very much at arm's length. However, the reorganisation of local government and the fact that we are Greater Mancunians, not Lancastrians, has brought us together and made us mindful—probably not early enough —of what Manchester has meant to the region.
Something that binds Manchester with the conurbations of the north-west is, of course, the railway. It was only in 1980 that we celebrated the 150th anniversary of the first passenger line from Manchester to Liverpool. What drew Bolton and Manchester together was the fact that the next railway line was a coal-carrying line from Bolton to the Atherton and Leigh area. Shortly after that Bury was developed as a railway town with its own railway station. The network that had spread throughout the north-west by the late 1840s was fantastic.
In view of what the railway has meant to the industrial development of the north-west, the north-west group of hon. Members, of which I am privileged to be the chairman, has no difficulty in supporting British Rail's provisions in that area. Indeed, we have gone out of our way to foster good relationships with the north-west division of the British Railways Board. We have had a first-class relationship with Mr. Anderson and have kept up to date with future developments and plans by means of briefings and meetings. It is much to our regret that that relationship has been marred by the very points that were raised by my hon. Friend the Member for Stockport, North.
I hope that the Minister, in his contacts with Sir Peter Parker and those representatives of British Rail who are here today, will make that point clear. Forty Members of Parliament from the north-west could have been here tonight to block the Bill on the basis of the disrespect that has been shown to them by Sir Peter Parker. I regret having to name in that way an efficient and honourable member of a nationalised industry.
However, when the north-west group of Labour Members writes to the chairman of a nationalised industry, as we did in December outlining our fears and requesting a meeting on various British Rail developments in the north-west, including the sleeper service, it is just not on that first, we should have to wait weeks for a reply and, secondly, that after a second letter we should be fobbed

off with the observation that the chairman had been advised against a meeting with local Members of Parliament on a constituency matter.
My hon. Friend and I are representatives of those hon. Members who share a sense of anger at the way that we have been treated by British Rail in the north-west over some outstanding items, particularly when we have always co-operated to the utmost with British Rail both in the north-west and nationally. However, we understand that the British Railways Board has been under pressure as a result of the Serpell report and the problems that my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) has outlined. Therefore, we have not pushed the matter but have preferred to deal with it in personal correspondence. It is because of the rebuff that we receive that we have taken the opportunity tonight to remind the powers-that-be where their attention should be directed.
We heard that the proposals in clause 5 leading to the development of a link to Manchester airport and the development of Manchester airport were important to the regional economy. I believe that it was described as being as important to Manchester and the north-west as was the development of the Manchester ship canal. That cannot be overemphasised. The Manchester ship canal was a great arterial waterway from the seas of the world into the heart of the industrial north-west. Regrettably, it is now little used. We would let that facility die, fade away and silt up at our peril. The state of our canal system is another matter about which my right hon. Friend the Member for Barrow-in-Furness is aware.
The new Manchester airport is as important to the development of the north-west as the Manchester ship canal once was. It is important to the whole of the north. At a recent meeting of the north-west group of Labour Members, a presentation was made on the development of the Ringway airport by the Northern Regional Consortium. This is not just a Manchester case for the development of a Manchester airport. It is a consortium of all the northern local authorities—the north-west region, Yorkshire and Humberside and the northern region—each recognising that the development of an international airport at Manchester would bring great economic benefits to the north. Anything that can weld Liverpool and Manchester together is a miracle, but it must have something extra if it can bring Yorkshire and Lancashire together. When it can go up to pease-pudding land in the north-east and bring that region into a united effort, the Government must sit up and take notice.
The 1978 White Paper, "Airport Policy", recognised the need for a classification of regional airports and for a regional airport strategy. It recognised that Manchester should be classified as a gateway international airport. Since then there have been efforts to develop that policy but it is of concern to us that there appears to be a lobby in the south for the development of other airports, for new terminals at Gatwick and Heathrow and for a completely new airport at Stansted. We believe that that would be a retrograde step and would take away resources that would be valuable to the north-west. The whole of the north resolved, in considering "Airport Policy", that priority in transport investment for improvements in accessibility to regional airports should be displayed by Government. If one can get the industry and commerce of the northern regions and local authorities together, that will be a significant achievement.
The Greater Manchester international airport authority, in its presentation to Members of Parliament, said:
The airport could be a national asset. It would be wrong to argue that it should go into an area which needs its economy boosting if the location was indefensible in overall transportation planning terms.
But, for Manchester, that is not the case. For example, Manchester is just as accessible as London, not only from the north-west region but also from the north, Yorkshire, Humberside and the midlands. My hon. Friend the Member for Stockport, North made the interesting point that about 50 per cent. of Britain's manufacturing industries lie within 75 miles of Manchester airport. There is scope at comparatively modest cost for improving the transport links still further.

Mr. Andrew F. Bennett: Will my hon. Friend stress the point that the number of manufacturing industries within 75 miles of Manchester airport gives considerable potential for flying out replacement parts for orders gained overseas? A large amount of such work is now going through Manchester airport.

Mr. White: I agree with my hon. Friend.
I emphasise that if the Government are really concerned about the regeneration of the old industrial areas which have suffered so much as a result of the contraction of basic industries, an international airport should be available for new markets and for salesmen from all over the world. Many of those who come to Britain to look for inward investment opportunities get off the plane at Heathrow and do not go any further than a 30-mile radius of London, whereas if the facility was available at Manchester the facilities, skill and locations and the resources at our disposal would be impressed upon them and the spin-off might be the regeneration of the old industries.
The case has been made by the Northern Regional Consortium and the importance of the economy has been emphasised. What the northern regions want to see above all is commitment from the Government. I am pleased that the Minister has said that the Government support the Bill. That is an important step in recognising our need. At the North-West Industrial Development Association there has been discussion on the development of the regional strategy and the regional economy. It stressed the importance of a Government commitment. In a recent report it said:
The case for a substantial Government commitment to the economic future of the north-west of England is undiminished. Such a commitment is evident already in the south-east as illustrated by the M25, the London orbital motorway, the Thames barrage, the proposal for a £103 million bridge across the Thames, and the recent revival of interest in the Channel tunnel. Moreover the British Airports Authority proposals to expand Stansted as London's third international airport would, if implemented, add substantially to the imbalance of investment already evident between the south-east and the north-west of England. It will pose a substantial threat to the future of Manchester International airport, one of the key growth points in the north-west economy still awaiting a direct rail link.
The Minister's statement tonight in support of this modest proposal answers that fear and I hope is the start of a redevelopment of transportation policy in the north-west which will provide the vital infrastructure for the redevelopment of our industrial base.
I started my speech by saying that the original development of railways more than 150 years ago was a

vital ingredient of the first industrial revolution. It was supplemented by the Manchester ship canal. The development and future of Manchester international airport is also a vital ingredient.
The Greater Manchester passenger executive and British Rail have recently completed a rail strategy for the Greater Mancheser area. I am pleased to note that within that strategy there is a re-equipment proposal for the Bury line, which runs into one of the most modern passenger rail-car interchange developments in the north. I look forward to the development of that investment. The point is made in the rail strategy that it is vital that a link to the Manchester international airport should be completed. It would add to the development of the airport which would add to the infrastructure of the region. That, in turn, would bring the development of new industries and the prosperity which makes such a transportation policy feasible.
We had the network 150 years ago. Perhaps it was developed in a hopscotch fashion. It was built up as demand arose. Three transport authorities in our area are analysing their transport demand and have a vision of what transportation should be in the Greater Manchester area in the future. Within that has been the development of the rail link to Manchester international airport.
I support the Bill because it gives legislative effect to that vision. I thank the Minister for his support for the Bill and urge the House to do likewise.

Mr. Peter Griffiths: A motion in my name has stood on the Order Paper in the past few weeks seeking that the Bill be given a Second Reading in six months' time. That is normally a device to show either a modest objection to a part of the Bill or a determination to see that it is strangled at birth. In placing the motion on the Order Paper my motives and intentions were to do exactly as the motion said, and to give time between when the Bill was published and its Second Reading for British Rail to give evidence of its good intentions, particularly with regard to part V, clause 28.
It is not my intention tonight to seek to prevent the Bill from receiving a Second Reading. However, I have the greatest reservations about the Bill's terminology and the lack of vigour with which the preliminary consultations that one would have thought would take place before the Bill was brought to the House were pursued.
I realise that it is not entirely within the province of British Rail to decide when the House will debate the Bill. That depends on many factors. However, when a miscellaneous provisions Bill is brought forward, which raises numerous local matters—some of which cannot be described as mundane, as they were by my hon. Friend the Member for Epping Forest (Sir J. Biggs-Davison), because they may be of the greatest significance to the area concerned—we should not be told that British Rail has good intentions about carrying out discussions after Second Reading and perhaps before or during the debates in Committee. We should know that those consultations have taken place and that there is broad local agreement.
I shall confine my comments to part V, clause 28. I welcome very much the cogent statement by the right hon. Member for Barrow-in-Furness (Mr. Booth) on this part of the Bill. Tonight we are not discussing British Rail's good intentions. We are not discussing hypothetical discussions that it might have with other parties. We are discussing the Bill, which is in black and white and which


contains terminology which, after the closest examination, can be seen only as sweeping and in some ways alarming. I hoped that my hon. Friend the Under-Secretary of State would say that the Government Front Bench was concerned at the seeking of such sweeping powers by a nationalised industry, certainly by a subsidiary of a nationalised industry, which, as the right hon. Member for Barrow-in-Furness said, could become a private company in the near future.
Those of us in southern Hampshire who know the history of the development of the railway to Portsmouth harbour will know that under the original scheme the pier, the harbour station and a landing stage were not built in a disinterested fashion by benevolent railway companies. The Joint Portsmouth Railway Extension Act 1873 placed an obligation on the railway company to provide and maintain a public landing stage.
Going back a little further, we know that as early as 1847 the two railway companies which at that time operated competitively in the Portsmouth area were required to provide a public landing stage with connection to the town. I emphasise the phrase "required to provide". This was because a public landing stage was seen as a place of public resort and an advantage to the city of Portsmouth which balanced the privilege which was given to the railway companies to build a pier, a carriageway and a station into the Portsmouth harbour instead of using the common hard for the purpose of bringing their ferry boats from the Isle of Wight to shore. In return for that privilege they provided a public landing stage.
There is no doubt that the intention at the time was that this should be retained as a landing place to which the public had free access in every sense of those words. To support that, I draw attention to the Act of 1873, where we see in section 10:
the two companies shall be at full liberty to use the said public landing place and approach for all purposes"—
and then, I emphasise:
but not so as to prejudicially affect the public use thereof".
The imposition of a charge surely affects the public right, and prejudicially affects it. If there were a modest charge, or provision for whatever charge was imposed to carry with it a right of appeal to some public authority to see whether it was reasonable, if the Bill indicated that this charge was to be a modest one, there might be merit in supporting this particular clause of the Bill. However, the fact of the matter is that it is hard to imagine a more sweeping power than that which is claimed for Sealink UK Limited under clause 28, subsection (2) of which says:
Notwithstanding anything in any enactment, the company may—

(a) from time to time demand, take and recover or, as the case may be, waive such charges for the use by the public of the landing stage and approach; and
(b) make such use thereof subject to such terms, conditions and regulations;

as the company may think fit.
There is no indication here that the charges are to be modest or reasonable, and I fear very much that the implication is that there is an intention to seek to make the pontoon and the public landing place either profitable or at least self-supporting.
There was never any intention in 1847 or 1873 that this should be so. This was a public provision made by the railways in return for the privileges they received. What is happening now is that British Rail is seeking to shuffle off the responsibility that has lain upon it and its predecessors for 140 years. It might be assumed that it will

be possible for British Rail to come to some amicable agreement over this matter and there are numerous suggestions as to what might happen. What we know, however, is what is proposed by British Rail.
We also know the strength of the opposition to the proposals as they stand at the moment. Petitions against this particular provision have been made by the Hampshire county council, the Portsmouth city council and the Portsmouth Harbour Ferry Company. If my hon. Friend the Member for Gosport (Mr. Viggers) speaks later he will no doubt draw attention to the attitude of Gosport district council. I have no reason to suppose that it differs greatly from that of the bodies that I have mentioned.
There is unanimous objection to British Rail's proposal. The public representatives oppose it on behalf of the local people. The main user of the pontoon—the Portsmouth Harbour Ferry Company—also objects strongly. The pontoon is also used by Crown employees, by Portsmouth harbour watermen and by members of the public. Local Members of Parliament will know from their postbags how strongly individual members of the public object to the imposition even of a relatively modest charge for use of the pontoon. Why should the public have to pay to enter what has always been a place of public resort?
Until the 1970s, the cost of the ferry service between the pier and Gosport was relatively modest, but with the rapid rise in the cost of fuel the cost of the ferry service has also risen. I fear that if the further burden of charges for access to the pontoon were added to the already increased charge the service would be severely damaged. The people of Gosport and Portsmouth find the ferry the most convenient way to pass from one town to the other. The alternative is a road journey that may take half an hour or longer, depending on the time of day. There would be no advantage in diverting the traffic to the roads and great disadvantage in damaging the excellent ferry service.
It has been suggested that the ferry company, as the main user of the pontoon and landing stage, might wish to take responsibility for that, but I fear that there would be just as much local objection to that company having power to levy charges as there is to British Rail doing so. The most sensible suggestion seems to be that some kind of consortium of the local authorities and the ferry company should be formed or that one of the local authorities should take complete responsibility for the pontoon.
Those suggestions should be investigated, but that would require more than just commercial negotiations. It would involve not just a renewal of the 20-year service agreement between the ferry company and British Rail, which would be fairly simple, but a major political decision by Hampshire county council and Portsmouth city council. The extension of municipal ownership is not something that the city council would lightly undertake.
These matters should certainly be considered, but they should have been considered long before the Bill was introduced. There is no guarantee that if the Bill receives a Second Reading today the negotiations that we wish to see will proceed with speed and vigour to a satisfactory conclusion. I do not suggest that there is other than good will on the part of all the parties concerned. There is good will and a willingness to find a solution, but we cannot give our approval in the House of Commons to what it is suggested may be the attitude of persons outside. We are being asked to give our approval to a Bill, the provisions of which I have read into the record and with which I will


not weary the House again. They are different from the bromides that might be offered to us in the sense of protestations of good will on behalf of British Rail and its Sealink subsidiaries.
I express the gravest reservations about the Bill. Had it been a matter of my own choice I would rather we had been able to say, "Come back in six months when you have carried out the discussions and then we will give your Bill a fair wind." We are not in a position to do that tonight. Therefore, I ask my hon. Friend the Member for the New Forest (Mr. McNair-Wilson), in so far as he is able to commit the sponsors of the Bill, to give us an assurance in clear and unequivocal terms that there is an intention to come to a solution that is acceptable to the public representatives of Hampshire and Portsmouth, to the commercial users of the pontoon, the Portsmouth Harbour Ferry Company and the Portsmouth watermen, and to those ordinary members of the public who for 140 years have had access to the place. If we are given that assurance then it should not be necessary to divide the House this evening.
Nevertheless, I must make it clear that should agreement not be forthcoming at later stages of the Bill, I could not permit such easy progress when the Bill returns to this Chamber, having been considered in Committee. I say that in all seriousness, because that would be the attitude of the people of Portsmouth and southern Hampshire. They would require that the Bill be fought unless a solution is found to the problem which is of such great concern to many hundreds of people who daily need to use the services of the Portsmouth Harbour Ferry Company.

Mr. Bob Cryer: I want to raise briefly one or two items on this private Bill which has been promoted by British Rail. I welcome the extension of British Rail's network to Manchester airport at Ringway. I hope that the discussions which the Minister said would take place between the British Railways Board and the Ministry of Agriculture, Fisheries and Food will solve any difficulties which the Ministry has brought to his attention. This is an excellent development by British Rail. Where massive numbers of people are involved, British Rail should seek to serve them.
I ask British Rail to bear it in mind that currently at Leeds-Bradford airport a £13 million extension is being constructed and that there is an abandoned track there of a railway that used to run to Yeadon. In the same context as Manchester, with a municipally owned airport and an increasing number of passengers, British Rail should consider the possiblity of serving that airport with an extension of the railway network if it has a vacant track bed which could be adapted either in whole or in part for such a purpose. That would be a useful development.
The introductory part of the Bill refers to the general duties of British Rail. It says:
It is the duty of the board … to provide railway services … and … to provide such other services and facilities as appear to the Board to be expedient, and to have due regard, as respects all those railway and other services and facilities, to efficiency, economy and safety of operation:".
I echo some of the comments that have been made today about the withdrawal of sleeper services. The British Railways Board is proposing to withdraw the King's Cross

to Leeds sleeper service on the ground that the decline in the number of users of that service means that the board cannot afford even to refurbish the sleeping coaches.
The board claimed that new coaches, which cost a great deal, would be necessary. When I challenged that I received a letter, not from the person to whom I wrote, but from an assistant to whom my letter had been passed, who said that even refurbishing could not be met out of the usage. However, he did not give the usage or the proportion of revenue that is ascribed to the sleeper services, either supplement or passenger revenue.
The board also claimed that the inter-city service between King's Cross and Leeds is now provided by high-speed trains, that it is a good service and that it has been speeded up since the introduction of the HS125s. As I pointed out, however, the HSTs are now roughly 10 minutes faster than the 1938 West Riding Limited service which was introduced on the same route using Sir Nigel Gresley's Streamlined Pacifics. Although I recognise that there has been an increase in speed, the railways did not regard the introduction of West Riding Limited in the late 1930s as sufficient reason for the withdrawal of sleeper services. Nor do I regard the introduction of the HSTs as sufficient reason for withdrawing the sleeper services.
British Rail must make out a much fuller case before it can justify that decision. The sleeper services will not bear, and have never borne, the full cost of train movements between King's Cross and Leeds, I am sure that if and when the sleeper service is withdrawn, the night parcels train that carries newspapers will be maintained, that the shunting facilities at King's Cross and Leeds will also be maintained, both for the newspaper parcels and other services, and that the only cost that will be reduced or removed will be that of porterage and coaching stock.
As a considerable number of sleeping cars will be available because of the introduction of new cars, it cannot be beyond the wit of British Rail to refurbish on a limited scale to provide the service. The service is relatively slow. The maximum speed, which is entirely satisfactory, is 80 miles an hour. The train is so designed that the occupants are not disturbed by excessive speeds. Therefore, the problem is not one of refurbishing coaching stock that has to go at the high speeds of which British Rail is capable.
I want to draw my anxiety about the King's Cross to Leeds sleeper service to the Minister's attention because in a recent Adjournment debate he said that he had nothing to add. That debate was limited. I merely want him to draw the attention of British Rail to the wider area of worry in the House about the withdrawal of sleeper services, which comes not only from the north-west but from Yorkshire and Humberside.
If the services are withdrawn, a potential use of British Rail will also be withdrawn, and it does not necessarily follow that people will automatically use the high-speed train service as British Rail suggests. They may be diverted to motor cars or the air service that is available from Heathrow, thereby causing yet another diminution of what I regard as a valuable facility for business men who want to go to Yorkshire and spend a full day in Leeds and the surrounding cities. They can do that by using the sleeper service. I strongly hope that the Minister will draw British Rail's attention to the anxiety of Yorkshire Members of Parliament, as he will do with regard to hon. Members from the north-west.
New railway works are proposed at Stockport, Disley and Whaley bridge. British Rail is diverting the


Nottingham to Glasgow service via Manchester, and I am anxious that the capital investment proposed should not be based on a design to improve the speed of that service, which would result in greater justification for the closure of the Settle to Carlisle railway. The service between Nottingham and Glasgow has been diverted through Manchester since May 1982, and is a tortuous and lengthy service. The Nottingham, Leeds, Keighley, Skipton, Settle, Carlisle service to Glasgow was much better.
Many people believe that what is proposed will lead to the closure of the Settle to Carlisle railway, which is one of the most magnificent railways in the country. It goes through starkly beautiful countryside. It has maintenance problems, as do all railways, but it is believed that the stories of withdrawal and the rundown of services is a prelude to British Rail presenting a case for the closure of this magnificent railway. The line is an important diversionary route to the west coast. When blockages occur, when there are derailments, or when the overhead catenary equipment needs attention, trains can be diverted through Hellifield, Settle and Carlisle to Glasgow. Closure of the line would cause severe operational difficulties.
I recognise that the works proposed in the Bill are primarily for another purpose, but if they facilitate the north-south movement, it must not be at the expense of the Settle to Carlisle line. If British Rail proposes to close that splendid scenic route, which has not been exploited to its full potential, there will be strenuous opposition in the House. An organisation called Friends of the Settle-Carlisle has support on both sides of the House, and that support will be strengthened and widened if British Rail decides to close the line. That is a warning to British Rail. People such as myself will be keeping an eye on the service in the hope that the board can be put under pressure to improve it this summer—not at some dim and distant stage in the future—so that the maximum use can be made of the railway and the revenues increased by providing a decent service, including a Sunday service.
The hon. Member for Portsmouth, North (Mr. Griffiths) mentioned the powers for Sealink UK Limited. I suspect that the hon. Member for Gosport (Mr. Viggers) will also refer to that. Clause 28 gives absolute powers, which are not unusual, to Secretaries of State. I am not happy for Secretaries of State to be given such powers, although they are accountable to the House. Hon. Members would like to think it is full accountability, but that is debatable. To hand over that power to a subsidiary of the British Railways Board and, moreover, a subsidiary that might be sold, is highly unsatisfactory.
British Rail is not easily accountable to the House, so a private company would be even less accountable. Hon. Members can table questions to the Secretary of State for Transport about meeting the chairman of the British Railways Board to discuss investment. We can raise a wide range of issues in that way. However, it will not be easy for hon. Members to raise questions about a private company. If a private company takes over Sealink, it can be assumed that the rights and duties of Sealink will be transferred to it.
There is an absolute power over charges. The Bill says:
Notwithstanding anything in any enactment, the company may
do certain things. That pushes aside any existing legislation or safeguards. The company will be able to do anything about charges. British Rail has the right to levy charges on the railways. The board is indirectly

accountable to the House. Many discussions take place in the House on railway services. The British Railways Board takes its liabilities in that respect seriously. Accountability may be remote, but it will be even more remote if a private company is concerned. A private company will seek not only to provide a public service but to maximise its revenue in a manner that may not be to the taste of the users of the service.
I do not like private legislation—concern has been expressed about it—that gives absolute powers to private bodies. Some hon. Members may recall that I objected to sections of the Lloyd's Bill. An easy solution might be for the Secretary of State to introduce an instrument levying the charges, which could then be subject to the negative procedure of the House. That would be an entirely satisfactory safeguard. The House deals with hundreds of such instruments every year. The vast majority are not objected to or prayed against, to use our archaic phrase. It would be a simple matter to apply to the Secretary of State, who could lay the order in the usual way. If people felt aggrieved, a prayer could be tabled and debated. Another safeguard would be to give local authorities the power to approve the charges by way of a byelaw if people felt that the involvement of the Secretary of State was too grand for a relatively minor matter.
Following the accumulation of legislation, Secretaries of State in various Departments deal with all sorts of minor and humdrum matters and are subject to delegated powers. Either way, hon. Members should examine private legislation carefully. I have much hesitation in handing over unqualified powers to the British Railways Board, although it has occupied a unique statutory position by virtue of the powers of the component railway companies of British Rail. Bearing in mind the possibility of privatisation, it was interesting to hear the reservations expressed by Conservative Members. I share with them the view that when such charges are made they must be subject to a proper negotiating process and some degree of accountability. In my view, the clause does not provide it.

Mr. Peter Viggers: The Bill has the broad support of the House and the debate has been marked by several well-informed and thoughtful speeches from Conservative and Opposition Members and by the fact that the minority parties have not found it necessary to disturb the even tenor of the Bill's progress by attending it.
The powerful speech of my hon. Friend the Member for Portsmouth, North (Mr. Griffiths) has dealt comprehensively with clause 28, which I have severe reservations about. I shall merely supplement his remarks briefly and add some minor points of my own.
As far as clause 28 is concerned, this Bill is too early. There is no consensus in south Hampshire as to what should be done about the Portsmouth pontoon except to say that the proposal in clause 28 is unacceptable. There is no doubt that in 1873 the railway companies accepted a duty to provide a pontoon and jetty in exchange for a benefit and that Sealink is now seeking to extricate itself from that duty. There can also be no doubt that the manner in which Sealink proposes to implement its powers is unacceptable. To give a small example. I understand that British Rail intends to impose a single fare for passengers going one way only between Portsmouth and Gosport and to do so on the Portsmouth side. Meanwhile, the


Portsmouth Harbour Ferry Company has decided to do the same, and to impose a single fare on the Gosport side. Of course both would like to diminish their overheads by imposing a single fare but have so far failed in their discussions to decide where it should be imposed.
It would clearly be unacceptable for broad powers to be given to British Rail through Sealink to impose any charge that it sees fit, so the proposal is unacceptable in broad terms. Indeed, it is also unacceptable in detail, because the ferry is very important locally. I think that I can claim to know the ferry as well as any hon. Member, because I used it for five or six years on the way to school. There are two ways to get from Gosport to Portsmouth, or vice versa. One can use the ferry across the half-mile strip of water that marks the entrance to Portsmouth harbour, or one can travel about 15 miles by road. Of course, travellers by road will almost inevitably go by car, while those travelling on the ferry will either use bicycles or, more probably, go by foot and then take advantage of the bus services in Gosport and Portsmouth, and/or the train services in Portsmouth.
If passengers start travelling more by road, the bus and train services, as well as the ferry, will lose passengers, it has been estimated that if a charge of 5p were made on the ferry, it would lead to about a 5 per cent. loss of custom, and that loss of custom would also be felt by the bus and train services. Therefore, we are in a classic vicious circle and a way out of it must be found in order to protect the ferry company and its services, as well as the bus and rail services.
I join my hon. Friend the Member for Portsmouth, North in not opposing the Bill at this stage. However, I should like to use two examples to underline the importance of the ferry and the pontoon to the area. First, the Gosport side of Portsmouth harbour is developing as a tourist centre, with the submarine museum and other tourist facilities. It is now more than ever necessary to develop good services across the mouth of Portsmouth harbour. In addition, there are wider proposals for the development of Portsmouth harbour as a tourist centre, with services possibly going through from the Portsmouth and Gosport side one day to the fine Roman castle at Portchester. Perhaps one day the munitions museum in the Gosport area will also be developed. In addition, the Victory has now been supplemented by the Mary Rose. The whole area is developing as a tourist centre and it is vital that the Portsmouth pontoon should be available not only for the ferry company but for the other boat services that may one day come in connection with the development of those tourist facilities.
Therefore, I hope that the local authorities will adopt a constructive approach when discussing this proposal with British Rail. I have every reason to believe that they will do so and, indeed, have done so. The Portsmouth Harbour Ferry Company, which is most concerned in the immediate future of the Portsmouth pontoon, will also adopt a constructive approach. Above all, British Rail, promoting the Bill, should not feel that because the Bill was not opposed at Second Reading it will not be opposed later on in its progress.
I put down a marker, and join my hon. Friend the Member for Portsmouth, North and other right hon. and hon. Members to say that the proposal in clause 28 as it stands is unacceptable. Unless a reasonable arrangement can be worked out among British Rail, the local authorities

and the ferry company, there will be opposition later during the course of the Bill. In case they have not done their homework, they should know that there are a thousand ways in which individual Members can oppose the progress of a private Bill.

Mr. Patrick McNair-Wilson: With the leave of the House, Mr. Deputy Speaker perhaps I may reply to the debates. Several important points have been raised by hon. Members, such as those raised by the hon. Member for Stockport, North (Mr. Bennett). I should like to thank him for his general welcome for the airport proposals and assure him that British Rail is anxious to find the most practical way to restore the level crossing to which he referred. I make it clear that it was not British Rail that took up the position over the petition to which the hon. Member referred. The Standing Orders Committee did so, and it was its ruling that was upheld. Nevertheless, I take the point that he made about the suggestions for the bridge, and that will be noted.
My hon. Friend the Member for Derbyshire, South-East (Mr. Rost) spoke of the objections made by his constituency that have not yet been met. That is true, but the proposals from the Erewash borough council have not been received. We understand that they are coming this week, and I can assure him that when they are received they will be most carefully studied. I hope that a comprehensive plan for the flooding problem can be arrived at.
The right hon. Member for Barrow-in-Furness (Mr. Booth) referred to level crossings and the problems that he felt had not been sufficiently spelt out. Clause 13 gives the details of three crossings and their closure times at night. I make it clear that his objections to clause 14, which is also about the closures, is that by these means the board is seeking powers to reduce the status of level crossings from public to private crossings. The present-day use of the crossings does not justify the cost of retaining crossing keepers, and the powers will enable the board to withdraw the crossing keepers from eight crossings, which will bring about a considerable saving. That is the thinking behind this part of the Bill.
However, as to the point made about the compulsory purchase provisions—

Mr. Booth: Before the hon. Member leaves the point about level crossings that change status from public to private, will the private owners who are served by them have to open and close the gates to gain access to a road and, if so, why should not members of the public do the same to gain the same access?

Mr. McNair-Wilson: Persons who need to make use of the crossings to gain access to their properties will still be able to do so, but persons having alternative means of access to their properties will not be able to use the crossings. The Bill makes provision for such persons to be compensated for the loss of such rights, which may go some way to meet the point that the right hon. Member made. The appropriate local authorities have been consulted about each proposal. The matter will, if necessary, be further considered in Committee. That is where I hope that the important point that the right hon. Member makes about the 1965 compulsory provision will be fully explained. I can give him that assurance.
The right hon. Member for Barrow-in-Furness further referred to the vexed question of the charges in clause 28, and I shall deal with the whole of the Portsmouth problem in a moment.
The hon. Member for Bury and Radcliffe (Mr. White) made some important points about the north-west. He also made clear the difficulties that he is having in establishing proper communications with the chairman of the British Railways Board. I assure him that those comments will have been noted, and I hope that some new relationship can be established. I am grateful to him for his reiteration of the importance of the rail links with Manchester to which other hon. Members have referred.
My hon. Friend the Member for Portsmouth, North (Mr. Griffiths) made a strong appeal for the provisions in clause 28 to be set aside until further consideration had taken place. He pointed out that he had earlier put down a blocking motion. Were we to have acceded to his request and delayed the matter for six months, the position would have been even more critical than it is now because six months from now brings us to September and, as I pointed out earlier, the lease to the ferry company runs out on 8 July. There is some need to press on with establishing a new relationship.
There seems to be some misunderstanding about the exact position of the pontoon facility. Much has been said about the 1873 Act and my hon. Friend referred to an earlier date in the 19th century. The 1873 Act authorised the extension of the railway system from Portsea to the Royal Naval dockyard. In so doing, it prevented access to the common hard which is still there. The pontoon facility came into being for that reason. It was not, as has been suggested by my hon. Friends the Members for Portsmouth, North and Gosport (Mr. Viggers), that in exchange for some facilities—perhaps the ability to build an extension of the railway—the railway company felt that it had to provide another public facility. The company

provided it because by building the railway it had prevented people from using the common hard which was the normal place for them to land. It must be made clear that those who have suggested that the pontoon is a public facility are not strictly correct. It is a facility that has been provided for the public because of what was done in 1873 —shutting off access to the common hard. The common hard still exists. People may continue to use it.
The important fact that must be faced, which was raised by the hon. Member for Keighley (Mr. Cryer), is how to overcome the existing deficit. I explained that the ferry company pays £1,500 a year. I have the maintenance budget for the landing stage for 1983. It talks in terms of £42,000. Somehow we must ensure that the cost of maintaining the facility is paid for either by those who use it or in some other way. I do not believe that it is sensible to continue with an arrangement that started in 1963, as I explained earlier, and which has been clearly overtaken by events, and expect the problem to go away if nothing is done. The problem will not go away. It must he dealt with, and I contend that it must be dealt with before the
I share the desire of my hon. Friends the Members for Portsmouth, North, and Gosport, to see an agreed solution. Let us hope that that will happen, but a solution must be found because without it it will not just be a problem for those to whom my hon. Friends have referred who use the facility, but for the ferry company as well.
With those few comments on the points that have been raised I should like to thank hon. Members for the manner in which they have received the various proposals. I hope that the Bill can now proceed to Committee and its remaining stages and that it will eventually become part of the modernisation process of British Rail.

Question put and agreed to.

Read a Second time and referred to the Examiners of Petitions for Private Bills.

Small Businesses (Staffing)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Douglas Hogg.]

Mr. David Myles: I am pleased to have secured this Adjournment debate on the evening of the Budget. I congratulate my right hon. and learned Friend the Chancellor of the Exchequer on what I would call a steady-as-you-go Budget. It keeps absolutely to the financial strategy that has marked the period of office of this Government. I am also honoured and pleased that one so senior as my right hon. Friend the Financial Secretary has seen fit to remain until this time of night, although it is not so late as some Adjournment debates, to reply. Those are the nice things that I have to say.
While everyone rightly deplores the fact that we have such a high rate of unemployment, most also accept that there is no simple solution to the problem. However, it would appear not be widely recognised in Government quarters that a vast area of potential employment is ignored or frustrated. My right hon. and learned Friend has shown recognition in his Budget of small businesses, although not so much of the self-employed. He has achieved, in a number of measures, gradual and constructive progress along the road to encouragement of small businesses.
I wish to concentrate mainly on small traders or business men who would be willing to employ one person. An example is a tradesman, perhaps a plumber, a joiner, a painter or a radio and television engineer who wants to set up in business on his own account. It is possible that he has been declared redundant. However, he still possesses the skills of his trade. He is told by Government and everyone else that it would be a good idea to establish his own business. I recognise that a tremendous number of people are following this course. Without the burden of overheads he finds that he is trading competitively. In no time at all, he is overwhelmed with work and decides to take on an employee. It may be a friend or someone else who possesses the same skills. Because he wants the operation of taking on an employee to be above board, he notifies the Inland Revenue and all the public offices that should be notified.
After a time, which can be considerable, he receives through the post a voluminous official paid envelope of the type I hold in my hand. It contains tax table A, tax table B, national insurance contribution tables, forms P7, P8, P45, P46, P11, P15 and 30BZ. Sixteen moves are needed to fill in P11, if the employees are paid once a week, and seven moves to fill in 30BZ. The man will receive numerous letters to explain the forms, but not a single letter of courtesy or explanation.
When I took up the matter with the Inland Revenue, I was told, "We send out so many of those envelopes that we do not have time to send individual letters." What do people in the Inland Revenue think that the poor employer has time for? He has to sift through all these leaflets and try to decipher what he is liable for—and he is liable, because he sees there warnings about what will befall him if he does not comply fully with the instructions which either he does not understand or he does not have time to comprehend. He is liable to be punished if he fails to complete the VAT forms correctly, or if he fails to remit the employee's PAYE tax, or if he fails to return the required census information.
I could go on, but in this short debate there is not time. However, I should point out that I have been inundated with letters from the National Federation of Self Employed and Small Businesses, the forum of private business, and a number of other organisations representing small businesses, as well as from many small business men, saying, "Thank goodness, at last, someone is drawing our plight to the attention of the Government."
The same tradesman then receives details of the national insurance scheme. He has to send contributions, regardless of whether he is making a profit. He is bombarded with regulations from bodies such as the Health and Safety Executive. Lurking in the background, because they do not communicate with him, are a wages council or a wages board, and a trade union or trade association, which require him to pay a certain amount to the employee. They do not tell him, but he is expected to know. Indeed, they can penalise him for not having obeyed instructions. There are 34 wages councils, and I am pleased to know that my right hon. Friend the Secretary of State for Employment has said that he is not happy about them.
The man will then receive a 59-page booklet which explains how he is to pay the first eight weeks' sickness benefit. This is complicated. I do not want to decry the scheme, but the onus is on the employer to complete and return the statutory sickness pay forms, and failure to do so could result in a £500 fine.
If the small trader has not already dismissed any notion that he may have had of employing someone, he may face even greater problems later. Regulations about working conditions may demand structural changes in work premises, and thus understandably inhibit the employment of full-time staff. Here I quote Mr. Anderson, the chairman of the National Federation of Self Employed and Small Businesses in my area. He says:
We employ only part-time staff in our Coffee/Gift shop. However if I took on one full-time employee I would have to provide two extra toilets (one male and one female) for staff. I believe I also have to have a rest room. Unfortunately, it would leave no space for customers".
That speaks for itself.
There is also the problem of obligatory redundancy payments whereby on the termination of a business, the employee may receive more than the man who has invested his money, risked his family and perhaps borne financial loss in order to build up the business.
We must also remember that if that man goes out of business he is not entitled to any unemployment benefit and he cannot even opt to pay a higher rate of insurance in order to do so. Could anybody blame that poor fellow if he were to throw all the bumf in the waste paper basket and tell his new employee that he is sorry but there is no way that he can be an unpaid civil servant and run a business.
I do not exaggerate the strain that such intolerable administrative burdens place on the small employer. I have an extract from a Scottish newspaper of 11 September 1980. That quotes 16 small business men as saying that their businesses are up for sale because of Government red tape. The small employer has enough to battle with in this time of recession without having to take on the machinery of bureaucracy, especially when it appears that the machinery is geared against him. Therefore, I ask the Minister to take steps to simplify the procedure, not only by removing some of the major disincentives but by offering some positive incentives. The EC's suggestion


that an allowance might be given towards the cost incurred by small and medium sized firms in complying with tax and other regulations is one possibility.
The subject of the private employer is a hobby horse of mine. I take as an example a highly qualified young lady who has benefited from a university training for one of the professions. She may work a year or two and then meet the man of her choice and get married. Before long she will start a family. Now she may not have any bent towards or interest in housework and looking after children. She wants to follow her profession and would like to have someone to look after the house and the children—there are plenty of people with such skills and inclination—but she is not allowed to do that because she cannot set the wages of such a person off against taxation.
Perhaps she is married to a thrusting young executive and lives in a surburban house with a large garden. Perhaps they will have benefited from the mortgage advantages announced in the Budget today. Perhaps neither her husband nor she has the time or inclination to look after the garden but wants to see it looking well and thus keep up the tone of the neighbourhood. Therefore, they would like to employ a gardener. There may be an unemployed man down the road who would love to be a gardener but they are unable to employ him for the simple reason that they cannot set off his wages against taxation.
Therefore, that young couple will pay the housekeeper and the gardener in cash. There will be no record and thereby thrives the black economy. I am led to believe that the black economy is estimated to be 5 per cent. of the GNP. Not only can they not employ a gardener and set off his wages against taxation, but a factory down the road with large grounds which employs five gardeners to cut the grass about three times every week can do so with the blessing of the Inland Revenue.
Surely at this time of high unemployment we should allow all wages paid to be tax deductible. I am certain that thousands of jobs could be created overnight if we took that relatively simple step. Surely we have departed from the "Upstairs, Downstairs" mentality when it was thought to be demeaning to work for a private employer. The Government have done much to return this country to sanity. I hope that what I suggest will be the next step.

The Financial Secretary to the Treasury (Mr. Nicholas Ridley): I congratulate my hon. Friend the Member for Banff (Mr. Myles) on his good fortune in getting the Adjournment debate. It was even more fortuitous that he got it on Budget night. He raised most important issues, to which I shall refer. I thank him for what he said about the Budget. We shall return to those matters in the rest of the week. I am grateful for his welcome for the proposals of my right hon. and learned Friend the Chancellor of the Exchequer.
There is no difference between my hon. Friend and the Government on the importance of small employers and people starting up on their own, beginning to take on employees and, from there, going ahead to expand. That is absolutely essential to the Government's strategy. I think that my hon. Friend will agree that over the years we have done an enormous amount to make that easier for people who have the enterprise and skill to set up on their own.
My hon. Friend may know that I was the Minister responsible for small businesses in 1971 when the Bolton

report was first published. We stripped away the impediments and difficulties that Mr. Bolton saw at the time, yet now, 12 years later, it is incredible how many more difficulties have been found and stripped away and how it is a continuing operation to improve the position of small business men. One never seems to reach a position where all is satisfactory.
So true is that that in some ways we have in the Budget anticipated my hon. Friend's speech. My right hon. and learned Friend announced the extension of the loan guarantee scheme, the increase of the registration ceiling for VAT to £18,000 and, perhaps even more important, the business expansion scheme, which my hon. Friend will find to be the greatest help to small businesses, particularly those that want to expand, and which assistance is unique in the Western world to those who want to get equity to expand their businesses.
In some ways my hon. Friend has anticipated my speech tomorrow because if I have the good fortune to catch Mr. Speaker's eye, Mr. Deputy Speaker, I shall conclude the debate on the Budget measures. I wanted to say a little about annual accounting for VAT, which my hon. Friend and many others have said is suitable for simplifying the life of small business men. We have also looked carefully at annual accounting for pay as you earn, which I should dearly like, but the cost in terms of revenue delay and the complications of doing so are such that it is not immediately possible for us to contemplate doing it.
What I have been able to distil out of that study is the possibility of encouraging employers to pay their employees net of tax. If my hon. Friend will bear with me I shall expand on that subject tomorrow. That is a useful way forward for small employers who find life too complicated.
My hon. Friend also raised a number of matters which impinge on the complications of taking on employees. I am sure that my hon. Friend will accept that some of those matters are not for me—for example, the statutory sick pay scheme, census information and the activities of wages councils—but he will also accept that my right hon. and hon. Friends who deal with those matters are active in trying to find ways of simplifying and improving the situation.
We have made continued progress in reducing the number of forms and returns with which small businesses have to deal. It is only fair to pay tribute to the Inland Revenue in that context. The Inland Revenue has greatly reduced the amount of paperwork and the complication of the paperwork with which the small business man is asked to deal. PAYE and national insurance contributions have given cause for a great deal of thought in the Treasury. I have spent a great deal of my time trying to find ways of simplifying the system. At the heart of the system—this is what we must try to preserve—is the fact that PAYE raises about £45 billion revenue and covers 1 million employers throughout the country. It is an extremely efficient method of raising tax. Indeed, it is the envy of the world because it is so simple to administer and costs so little to raise the money. But my hon. Friend was absolutely right to say that it depends on employers to administer it. On so many aspects of PAYE, the onus is on the employer to get the sums right and to pay up the money. I absolutely accept that an argument can be made for the Government to reimburse or assist with compliance costs. This matter will come before the House when we consider the report on the powers of the Revenue


departments, which is soon to be published. If concessions are made to cover employers' costs in administering the tax system, tax must be increased elsewhere in order to recoup that money. It is a vicious circle.
The burden is greatest for the smallest employers. They cannot always afford computers and modern office machinery, although those are becoming cheaper. In most parts of the country accountants can now be found to do payrolling at a modest cost to employers. The accountants will set up the system, will check it at the end of the year and, if necessary, will administer the monthly figures that have to be returned. As I will explain if I catch Mr. Speaker's eye tomorrow, the employment of net-of-pay techniques can be helpful in this respect.
We have been simplifying the income tax system. The first simplification was to take child allowances out of codings and to substitute child benefit. More recently, life assurance premiums have been taken out of codings and on 4 April mortgage interest relief will be taken out of codings. Those two will then both be reimbursed at source. Gradually and step by step, the coding of income tax is becoming ever more simple. Indeed, for those in work it is a question only of whether they are married or single or are earning wives. In due course, if we succeed in solving the riddles involved in the Green Paper on the taxation of husbands and wives, which is before the House, it may be possible to simplify even further. That basic simplification of the coding system and of income tax allowances has been part of the Government's strategy to make the system simpler. We hope to proceed further with that to make it easier for people to administer. That is one side. The other side is the extent to which they comprehend what is required of them. My hon. Friend is quite right in saying that many small businesses find it almost impossible to understand what is required.
I have asked the Inland Revenue to produce a new leaflet. My hon. Friend may say that there are too many leaflets already, but I think that a new leaflet, designed specifically for the first-time employer and setting out the details very clearly, will be an asset. I have a first draft of this and perhaps my hon. Friend would like to see it. When we have a completed draft we shall let him have a copy of it because I should welcome his comments and those of the small businesses with which he has discussed this issue to make sure that we get it as intelligible and simple as possible.
In addition, there is a general review of stationery and forms—we would welcome his comments on that too—to ensure that anybody who wants to devote the majority of his time to running his business properly can in a few minutes understand what is required of him in terms of calculating PAYE and national insurance contributions.
My hon. Friend mentioned that some of his small business constituents had not had the courtesy of a letter from the Inland Revenue. I am sorry about that. He also said that there had been some delay in replying to correspondence. If he would let me have particulars of any discourtesy or delay on the part of tax inspectors I should be only too pleased to follow the matters up. I want to make it clear that in the vast majority of cases the Inland Revenue serves taxpayers extremely well. The Inland Revenue is as sensitive as I am to the need to make that service universally acceptable, and the only way that we

can do that is by seeing that specific instances of slipshod or discourteous behaviour or delay are brought to my attention so that I can have them investigated.
The problem of the simplification of the PAYE and national insurance contribution systems can be solved only in the context of further and more deep-seated reforms of those systems. We are constantly pushing to simplify, to explain and to make things easier. I think that my hon. Friend would be reassured to know that the Government are not content with that. We are constantly looking at ways of making the burden on the small firms easier to stand and the regulations easier to comply with.
The level of that burden, of course, is a different matter. It depends on how much revenue my right hon. and learned Friend the Chancellor of the Exchequer has to raise, but I should not like my hon. Friend to think that what he has said falls on deaf ears. The Government are acutely sensitive to the need to solve the problems that he has put before the House this evening.
My hon. Friend asked whether certain expenses could be deducted from corporation tax for small businesses just setting up. He instanced the worthy technological woman who marries and has a family and then wants to get back to her calling and to have somebody to look after the children. This is perhaps the most deserving case in the spectrum that this problem throws out. We must start with the law. The law says that the expenses of a business are allowable against practical profits only if they are incurred for the purpose of earning the profits of the business. Those words have been tested over many decades, and they do not include expenses of the sort that my hon. Friend has in mind.
Expenses such as domestic help so that one can go out to work, or assistance with child care so that the wife can leave the children and go out to work, come into the category of putting one in a position of being able to carry on a business. That is quite different from expenses incurred for the purposes of earning a profit. For instance, the cost of travelling from home to work is necessary to put one into the position of being able to carry on a business. One might say that having to wear clothes is an expense incurred in going to work, but it is an expense necessary to carry on a business rather than for the purpose of earning profits. The same is true of minding the garden.
My hon. Friend must appreciate how difficult it would be to draw a line. If the basic distinction between the two definitions that I have given were altered, the line would have to be drawn in a new place. I could claim that to go to work I have to travel, that I must have a house from which to travel and somebody to mind my garden and my children. I might even claim that it is necessary for me to have food and clothing to be in a position to go to work. That comes close to including all expenses of the good life. Clearly, one cannot exempt all those expenses from tax.
Where would the limit be? My hon. Friend argues from the case of the deserving young wife in a small business and he makes a compelling argument. One might argue, however, that for those who are self-employed or who employ fewer than 10 people all those expenses should be tax deductible. Or should it be based on the type of work that they perform? Either system creates great difficulties. It may be argued that if one is at work all day it is necessary to employ a butler to uncork one's claret. Is that to be allowable against tax? Such a system comes close to being a butler's charter and my hon. Friend touched on the historical difficulties involved in that type of rule.
We are not doctrinaire or dogmatic about this. We breached the rule about business expenses in the Finance Act 1982, which allowed companies to second members of staff on full pay to enterprise agencies and for this still to count against corporation tax. My right hon. and learned Friend the Chancellor announced today that the same concession would apply to staff seconded by tax-paying companies to work for charities. I think that my hon. Friend would agree, however, that the House as a whole would find both those cases acceptable. I am not sure that it would find the employment of child minders, gardeners or, at the extreme, more fanciful characters so acceptable.
My argument is therefore not based on a doctrinaire objection. It is simply very hard to see where the line could be drawn and held. I suspect that wherever my hon. Friend suggests it should be drawn the cost might become very heavy.
For those reasons, we have not felt able to take the step that my hon. Friend advocates. The concept of the personal allowance is designed to take into account, broadly speaking, the domestic and family responsibilities of taxpayers. There are three categories of personal allowance—the married man's allowance, the wife's earned income allowance and the working single parent's allowance. They are supposed, each in its rather rough

justice fashion, to compensate people for the expense of not staying at home and minding the children or looking after the spouse or the garden but going to work instead. That is the origin of the personal allowance. I do not claim that personal allowances fit every circumstance—far from it—but that is how the tax system, as we have it, seeks to take care of the sort of problem that my hon. Friend has raised.
Before my hon. Friend can force the logic of his argument upon the Government, he must deal with the problems of definition and of helping the people that he and I might want to help without helping many people that both he and I would agree were not deserving of the help of the taxpayer because of what they seek to do.
I repeat that I am grateful to my hon. Friend for bringing these matters to the attention of the House. I hope that I have shown the deep thought and consideration that we have given to them already. I hope that he will continue to give us the benefit of this views, despite the fact that, although I can go with him almost the whole way on the first half of what he said, I find difficulties about accepting the second half of his argument.
Question put and agreed to.
Adjourned accordingly at four minutes to Ten o'clock.